Asian coffee market nudging back to life but prices fall
Asian coffee market nudging back to life but prices fall
SINGAPORE (Reuters): Coffee trade in Asia is slowly coming back to life as social unrest gradually comes to an end in Indonesia, one of the region's main coffee producers, traders said.
But prices are falling in tune with lower levels in London and Vietnamese trading houses have cut their offers to sell stocks before the main bulk of Indonesian crop hits the market, they said.
"Vietnam is losing its advantages. Vietnamese can no longer dominate the market. They are quite happy to sell now, unlike in the past few months," said one trader at a coffee trading house in Singapore.
Before Indonesia's crop started to hit the market in May, Vietnam was Asia's main coffee supplier and traders there held back stocks waiting for higher prices.
"The Indonesian crop is coming all right despite riots last month. There are small lots of offers and more will be on the way later this month," said the trader.
Indonesia's harvest was delayed by a drought triggered by the El Nio weather phenomenon, which also affected the output of other commodities such as rubber, cocoa and rice.
Indonesia's coffee production is expected to reach 330,000 tons in 1998, unchanged from last year.
Offers from Vietnam were heard at around $60/$90 a ton under London levels, compared with a discount of about $40 a week ago.
In London on Tuesday, benchmark July futures ended Tuesday at $1,763 a ton.
Coffee trade in Indonesia came to a halt in mid-May when bloody riots erupted there and traders, mostly ethnic Chinese, fled for safety.
Despite signs of increasing political stability in Indonesia, many traders said they were still worried by the uncertain economic situation.
The market was also quiet in Thailand, traders said.
Some exporters there said this season was a bad one as some of them had committed to sell when the baht plunged to a historic low of 56.90 per dollar in January but received payments only when the currency firmed to 40 per dollar.
Main markets for Thai coffee are the United States, South Korea and Japan.