Broker absence hits Asian coffee trade

Broker absence hits Asian coffee trade

SINGAPORE (Reuters): The absence of a strong middleman in the
Indonesian coffee market is hampering trade flow and restricting
exports, traders said yesterday.

The coffee merchants, mostly ethnic Chinese, are no longer
venturing into the hill country to source for coffee due to
renewed tension in Indonesia where the Chinese are singled out
for attack, they said.

"Most of the middleman are Chinese, by chopping the middleman
you are slowing exports," one trader at a local house said.

"They don't dare to travel far up to the hills. This is
clogging the distribution line."

Traders said an increase in security at the main trading
center of Bandar Lampung in Sumatra after a spate of looting, is
also slowing the arrival of beans.

"They have to travel in armed convoys and this is slowing the
movement," one trader said.

Beans are still offered from Indonesia in small lots of about
50-100 tons but offers are not being made for full cargo sizes of
500-1,000 tons, traders said.

The continued shortage of containers, they said, is another
factor that is contributing to the reduced exports.

They said about a quarter of Indonesia's annual production,
estimated at 330,000 tons, have been exported so far, but some
are skeptical if the full export potential could be achieved due
to the country's economic troubles.

"It's so chaotic out there right now. I think some of the
exports would be affected by all the things that are going on
down there," another trader said.

Indonesian traders said hundreds of people had gotten away
with 15-20 tons of coffee beans per day during one weekend of
looting in early July, plucking even unripe beans.

Despite the supply hiccups, prices have not risen due to weak
demand and casual buying interest as buyers are comfortable amid
news of a healthy harvest from Brazil.

"There doesn't seem to be much demand at the moment. Buyers
are waiting for Brazil, which seems on track to give a huge
harvest," a trader said.

In London on Tuesday, benchmark September ended at $1,554,
compared with $1,544 a week ago.

Indonesian supplies were offered at around $130/$160 per ton
under London levels, steady from a week ago. Vietnam benchmark
grade 2, five percent black and broken beans were seen by the
trade at $90/$130 under, also unchanged.

Traders said Vietnam is still offering limited volumes, even
though its at the tail end of sales until beans from the next
harvest arrive in October.