Asian coffee trade slow as Indonesia holds stocks

Asian coffee trade slow as Indonesia holds stocks

SINGAPORE (Reuters): Coffee prices in Southeast Asia hovered around their recent levels, but trade was sluggish with Indonesian farmers reluctant to sell coffee beans because of the volatility of the rupiah, traders said on Wednesday.

Indonesia is now Asia's main coffee supplier as Vietnam enters the end of its harvest, but economic and political uncertainties there have slowed down business, they said.

"There is no room for traders at the moment. Prices in the West are not good and nothing is certain about currencies here," said one trader in Singapore.

Sentiment on the rupiah was weak on Wednesday and it edged down to 14,800/14,950 to the U.S. dollar in early trade from Tuesday's 14,600/14,800.

"Most Indonesian farmers are not in a hurry to sell, and at the same time, there are few buyers. The market is very, very slow," he said.

In London on Tuesday, benchmark September was last traded $30 firmer at $1,630, but off a high of $1,649, on industry buying and short covering

But the outlook remained bearish as the expectation of a big Brazilian crop kept coffee prices under pressure.

Leading Brazilian coffee exporter Unicafe cut its forecast for the 1998/99 crop by 500,000 60-kg bags to 34.7 million, but still well above the 21.6 million bags from the 1997/98 crop.

"Demand is thin everywhere," said another trader. "In Asia, if one kilogram of coffee is the same price as eight kilograms of rice, what do you think people will buy?"

The only optimistic sign is probably from the Philippines, which will import more coffee beans this year because of tight local supplies triggered by drought.

Indonesia's harvest started in May and is expected to peak in July and last through September, but the social unrest in May and recent falls in the rupiah made exports slow, traders said.

Traders in Indonesia said between 500 and 700 tons of coffee beans, compared with around 1,000 tons at normal times, arrived daily in Bandar Lampung from the plantations.

Indonesia's coffee production is expected to be 330,000 tons, unchanged from last year, because of a severe drought induced by the El Nio weather phenomenon.