Traders cool on coffee producer plan<\/p>\n
SINGAPORE (Reuters): A new producer plan to bolster prices on
\nthe multi-billion dollar international raw coffee market was
\ngreeted coolly on Monday by Asia traders who suspect regional
\nproducers will find it hard to fund and to enforce.<\/p>\n
"How are they (Indonesia and Vietnam) going to finance (the
\nscheme)? Where are they going to hold stocks?" said one trader
\nbased in Bangkok. "In the short term, it might support the
\nfutures market. But in the long run, (it) ...is no good because
\nthere is oversupply."<\/p>\n
World producers agreed in London on Friday a two-year scheme
\nto keep surplus coffee off the US$8.0 billion a year global
\nmarket in a bid to lift prices that have fallen as much as 40
\npercent since December to around seven-year lows.<\/p>\n
The 14-member Association of Coffee Producing Countries
\n(ACPC), backed by five non-member producers, agreed to retain 20
\npercent of coffee exports until the average ICO price rises above
\n95 cents a pound. The ICO indicator price was around 69 cents on
\nFriday.<\/p>\n
Traders doubted Indonesia and Vietnam, two of the world's top
\nrobusta coffee producers, could comply with the scheme.<\/p>\n
They said the nations lacked sufficient financial resources to
\nhold back large amounts of beans offered by farmers or exporters,
\nand did not have proper storage facilities even if the funds
\nexisted.<\/p>\n
Some traders even said the agreement might actually encourage
\nIndonesia to sell more beans in the near future if it did succeed
\nin propping up prices.<\/p>\n
"If it gives support to the futures market, farmers and
\nexporters will sell more coffee to the market...They need to sell
\nbecause coffee is arriving," said another trader.<\/p>\n
Indonesian farmers and exporters have delayed sales as long as
\npossible despite the country's main harvesting season because of
\ndepressed prices.<\/p>\n
Traders in Indonesia said earlier on Monday there was no need
\nfor the country to join the scheme as it was uncertain if all
\nproducing countries would honor the agreement.<\/p>\n
"We had such a retention scheme about five years ago. What
\nhappened that year was Brazil and Colombia were cheating on us,"
\nsaid a Jakarta-based trader.<\/p>\n
"I believe they will do such thing again this year."<\/p>\n
In Vietnam, where many coffee exporters and farmers were
\ncaught by the slide of futures prices during peak harvest season
\nearlier this year, the news over the ACPC agreement was also met
\nwith skepticism.<\/p>\n
Key barriers included getting Vietnam's vast bureaucracy to
\ndraw up formal implementation plans, as well as finding the money
\nand the will to force compliance in an industry that covers
\ndozens of exporters.<\/p>\n
"For Vietnam, this plan is nothing but talk. Vietnam can
\npromise the world and look like they are doing something," said a
\ntrader in southern Ho Chi Minh City.<\/p>\n
"I am also skeptical Vietnam can finance this plan, although
\nthey do have several months to play with."<\/p>\n
For Vietnamese coffee producers and exporters, memories remain
\nfresh of the government's failure to come to the rescue earlier
\nthis year, despite industry calls for money to hold back coffee
\nbean exports amid sharp international price declines.<\/p>\n
Many had to sell beans at a loss over the past several months,
\nnow holding little ahead of the new harvest season starting from
\nOctober.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/traders-cool-on-coffee-producer-plan-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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