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: