Coffee conference to focus on Vietnam, low prices

Coffee conference to focus on Vietnam, low prices

SINGAPORE (Dow Jones): Continued weakness in world coffee
prices and producers' struggle to shore up prices are likely to
be the dominant themes at an industry gathering starting Thursday
in Thailand.

Vietnam, in particular, is set to take center stage as its
retention efforts are being closely watched by industry
participants.

Asia includes the world's two biggest producers and exporters
of robusta coffee: Vietnam and Indonesia.

"In terms of what people will be asking, a lot will involve
Vietnam," said a Singapore-based senior trader, who will be
attending the conference.

The conference, which runs Feb. 22-23, is organized by IBC
Asia Ltd., and will be held in Chiang Mai, Thailand.

Vietnam, where rapid expansion has made it a giant robusta
producer, is set to overtake Colombia as the world's second
largest coffee producer after Brazil.

It is expected to finish the 2000-01 crop season with a record
production of 700,000 metric tons or more, compared with 600,000
tons in 1999-2000. Its crop year runs October to September.

"By the end of this year, they (Vietnam) would have exported
far more coffee than Colombia," the trader said.

The Vietnamese government last week approved a plan to retain
90,000 tons of coffee on top of an earlier 60,000 tons it has put
aside as part of its contribution to a global retention plan
aimed at lifting sagging world prices.

"In the internal market, people are feeling confident about
the retention and farmers aren't selling the coffee," said a
trader in Ho Chi Minh City.

Despite the strong stand shown by many producing countries,
the retention plan doesn't seem to have made any tangible impact
on world prices and many participants remain skeptical whether it
will work.

Some believe that producing countries don't have enough
capital to support the plan, and will start selling when cash
flow requirements become tight.

Francis Renaud, chief representative of Volcafe Limited in
Vietnam, is scheduled to speak on Vietnam from a commercial
perspective.

Of interest will also be Indonesia, still struggling to
implement the retention plan despite its repetitious declaration
of support.

Derak Watson, representative of the Association of Indonesian
Coffee Exporters in London, will provide an update on the key
issues and concerns facing the coffee industry in Indonesia.

Indeed, the undercurrent of the conference is likely to be the
immediate problems faced by the global industry, with world
prices having fallen below the cost of production of many
producing countries.

Many growers have stopped tending to their trees completely as
the effects of low prices began to be felt.

Nearby robusta coffee prices on the London International
Financial Futures & Options Exchange have fallen more than 30% on
year to $638/ton Monday.

It's a similar scenario for the arabicas market. Nearby
arabica coffee prices on the New York's Coffee, Sugar & Cocoa
Exchange have fallen over 40% on year to 59.80 cents a pound
Friday. CSCE was closed Monday for a public holiday.

"In today's terrible price environment for robustas, lowest
prices ever, well inferior to production costs, it has become of
paramount importance for robustas producers to create gourmet
coffees and to increase their income," said Pierre Leblache,
president of ConsultAbroad Inc., who will speak at the
conference.

The conference will also hear from Makoto Tsujimoto, director
of the foreign trade division at Japan-based UCC Ueshima Coffee
Co. Ltd. He will be speaking on industry developments and key
trends in the Japanese coffee sector.

Japan is Asia's biggest coffee consumer, importing about six
to seven million 60-kilogram bags a year. Globally, it lags only
the U.S. and Germany.

Jens Nielsen, an employee of Socadec S.A., who was earlier
scheduled to speak on "Asian Coffee Trade," will be replaced by a
colleague.

Nielsen is still in a Laos jail after being detained in
connection with unpaid bills incurred by his previous employer,
G.Premjee Ltd.

Nielsen, who was a vice-president with Premjee's coffee unit,
recently joined Socadec S.A., which appointed him as
representative of the company operations in Vietnam.

Tran Ngoc Han, a Socadec official and a former trader with
Premjee, will replace Nielsen as the speaker, according to IBC.