Coffee market awaits traders' return home
Coffee market awaits traders' return home
SINGAPORE (Reuters): Indonesia's coffee market has come to a stop since ethnic Chinese started to flee after riots last week, traders said.
"There is nobody you can contact in Indonesia. Most coffee traders in Indonesia are Chinese and they have all left," said one Bangkok-based trader.
Another trader joked that business could be done in Singapore as many Chinese Indonesians were now staying at hotels in the city state.
"There is only one problem -- how to ship supplies? Nobody knows what's going on there and nothing is within anyone's control," said the trader with a Singapore trading house.
Indonesia is a leading producer of robusta coffee. Robusta prices have been surging since March due to poor African harvests and a lack of Vietnamese selling.
The Indonesian harvest, usually in April, was delayed by one month this year because of an El Nio-linked drought last year.
Small lots of Indonesian coffee started to arrive in the market in early May, but recent riots coupled with a shortage of containers kept the market extremely quiet, traders said.
"We can only hope the situation in Indonesia can stabilizes as soon as possible before the main crop comes in late May and early June," said one Singapore trader.
On Wednesday, Indonesian Moslem leader Amien Rais called off plans for a mass "people power" demonstration and students occupying the Indonesian parliament said they had abandoned plans to march on the presidential palace to demand the ouster of President Soeharto.
"It looks quiet now but we still have to wait to see whether Chinese merchants will be convinced that it's safe to go home," said one trader.
A trader with a European coffee trading house said there had been no offers from Indonesia since last week and major trading houses also stepped out of the market.
"They are not giving prices and we are not asking. The risks are too high to do business with Indonesia," the trader said.
In Vietnam, the other main coffee producer in Asia, sales slowed down after active trade last week, traders said.
"They sold quite a lot last week when London levels were high. Now they are holding back again," said one trader.
Coffee stocks in Vietnam are estimated by the trade at between 40,000 and 60,000 tons.
"As there is no way to get Indonesian supplies, Vietnamese exporters are still asking for premiums. But the high prices cannot attract buyers," the trader said.
Vietnamese coffee was offered at between US$1,920 and $1,960 a ton. In London on Tuesday, benchmark July closed $45 lower at $1,910 a ton amid profit-taking in the wake of the Indonesian crisis.
One trader said Indonesian coffee prices were at around London levels but most traders said there were no quotes for Indonesian coffee.
"The price doesn't mean anything. It's just talk but not trade. No shipowners want to go to Indonesia at the moment," said one trader.
Differentials of key Asian coffee origins, basis the July robusta futures contract in London: