Asia coffee sees few offers as LIFFE touches new lows

Asia coffee sees few offers as LIFFE touches new lows

SINGAPORE (Reuters): The Asian physical robusta coffee market is almost at a standstill despite Indonesia hitting its peak harvest season because London futures, at fresh 30-year lows, are discouraging suppliers everywhere, traders said on Thursday.

"We should be in the peak season. But the coffee flow is very poor," said a trader based in Lampung, Sumatra.

"Prices are not seen by the farmers to be at levels they would like to sell."

Indonesia's political crisis is encouraging farmers, local traders and speculators to hold back coffee beans because the rupiah currency might weaken further.

Sumatra, where most robusta coffee is grown, is shielded from the violence that has hit Java, but traders, farmers and speculators maintain a close watch on the rupiah, which for the moment is holding fairly steady around 11,000 to the dollar.

Traders estimate Indonesia has finished harvesting about half its crop. However, a lot might be left on the trees to rot as farmers were not interested in picking all the cherries.

"We believe there's potential for 375,000 tons. However, they may pick only around 325,000 tons," the trader in Indonesia said.

Reflecting a global oversupply, the benchmark July robusta futures hit a new lifetime low of $556 a ton on Wednesday before ending at $561.

This compared with around $680 at the end of last year and around $825 in early October when the Vietnamese season began.

Despite a constant decline in London prices over the past week, the price for the Indonesian benchmark grade-four beans were seen at around $420-$430 per ton, FOB.

The differential narrowed to around $150 per ton, from around $160 last week, because local exporters were reluctant to sell below 4,200-4,300 rupiah ($0.378-$0.387) per kilo, traders said.