Coffee prices fall as RI unrest ends
Coffee prices fall as RI unrest ends
SINGAPORE (Reuters): Coffee prices fell in Asia as recent
supply worries eased due to fresh rains in Vietnam and an
apparent end to civil strife in Indonesia, traders said
yesterday.
As a result buyers were relaxed, only picking up bargains as
they waited for sellers to further cut prices, which have already
fallen by about $50 per ton from a week ago.
"Everything looks okay, production-wise. But I am not sure
about the supply chain in Indonesia," a trader with a Singapore
trading house said.
He said so far there are no signs to indicate there are
problems but added that the distribution network will only be
tested fully sometime in mid-June when exports begin in earnest.
"There are some shortages of containers but otherwise there
are no big problems," another trader said.
With most traders back in their offices in the northern
Sumatra commodity trading town of Medan, offers are slowly
trickling out for small volumes.
"Things should really go into full swing from mid-June
onwards. Hopefully by then there will be some order," a trader
said.
The Indonesian commodity markets were thrown into turmoil this
month when protests demanding the resignation of then President
Soeharto led to riots, sending many ethnic Chinese fleeing. Calm
has since returned to the capital, Jakarta, the heart of the
violence, and those who left have been returning.
Traders said Grade 4, 80 defects were quoted at about $1,700
per ton or about $100 below July London futures' prices.
In London on Tuesday, benchmark July closed $45 lower at $1,830 a
ton as Indonesian coffee returned to the markets and rains fell
on the parched coffee plantations in Vietnam.
The rainfall in the main coffee growing area of Daklak,
Vietnam, has eased earlier fears of a sharp drop in crop harvest.
Traders said the Vietnamese dropped their offers to around
$1,800 on free-on-board Saigon basis for Grade 2, 5.0 black and
broken.
This, they said, implied that the prices have dropped to a
discount of between $20-40 per ton below July futures' prices but
at a premium of about $10-30 over September as some deals were
sealed based on September prices.
Thai coffee exports for this year are expected to fall to
about 55,000 tonnes compared to 69,000 tonnes last year due to a
smaller crop, a Bangkok-based trader said.
Domestic consumption, he said, has fallen by 5,000 tonnes to
20,000 tonnes.
Most Thai sellers have sold out their beans for this season
and would be back in the market in December.
Differentials of key Asian coffee origins, basis the July
robusta futures contract in London:
Traders in Tokyo said, however, yesterday Japan, the world's
third-largest coffee consumer, might have to buy more coffee from
Vietnam and Brazil as shipments from Indonesia were likely to be
delayed further.
"We may have to buy more coffee from Vietnam since we expect
Indonesian shipments to be delayed by up to one month," a trader
at a major trading house said.
He said he was even considering buying robusta coffee from
Brazil's coming crop, which will be available from June.
Earlier this month, Japanese traders flocked to buy robusta
coffee from Vietnam amid fears of delays in coffee shipments from
Indonesia due to political turmoil there.