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.