Indonesian coffee comes out, but crunch seen later
Indonesian coffee comes out, but crunch seen later
SINGAPORE (Reuter): Indonesian coffee production has been rising steadily over the past few weeks, but output is expected to peak towards the end of May and this may pinch supplies later in the season, traders said on Wednesday.
"Coffee has been coming out quite heavily, but I think the crop season will be shorter because of a fall in production this year," a senior trader for a European commodity house said.
Dealers said Indonesia's coffee output will probably fall by about 20 percent in 1997 after heavy rains and strong winds last June stripped the trees of their flowers, especially on the island of Sumatra.
"There's a steady flow of coffee coming out. If there is any fall in output, we'll see it later in the season. That may be apparent by August or later," another dealer said.
Congestion in ports such as Lampung, Sumatra is expected to worsen by the end of May as the bulk of the harvest arrives.
But overall Indonesia's coffee exports are seen dropping 20 percent this year to around 240,000-270,000 tons.
The country is the world's third biggest producer of coffee behind Brazil and Colombia.
The total volume of coffee sold or committed from Indonesia is currently calculated by the trade at around 120,000 tons, up from last week's estimate of between 110,000-115,000 tons.
Indonesia's benchmark Grade 4 coffee, 80 defects, was quoted by dealers at around US$1,400-$1,480 a ton FOB Lampung from the previous week's $1,345-$1,400 on the same basis.
The trade is cautiously monitoring developments in Brazil and the looming truck drivers strike in Colombia.
"Everybody in the business is looking at developments over there (South America)," a trader said.
Business was quiet in Vietnam this week, which is now waiting for its next robusta harvest in late-November.
Focus
"There's not much trading going on in Vietnam now. We're just waiting for the next harvest. The focus at the moment is on Indonesia and whatever else happens in South America," a dealer said.
Dealers believe exporters in Vietnam are still holding on to about 40,000-50,000 tons of robusta coffee.
"You'll see them come into the market if a frost hits Brazil or some other news lifts prices," one said.
The price of Vietnam's Grade 2 coffee, 8.0 percent black and broken, was seen by the trade at about $1,400 ton FOB Saigon against $1,300-$1,400 last week.
London robusta prices are tipped to open unchanged to lower later on Wednesday.
"I think it's due $30 down," one trader said. Another pegged the fall at $60-$65.
Trading in the robusta coffee contract on the Singapore Commodity Exchange (SICOM) was a paltry 400 lots. SICOM said the 400 lots were settled at $1,549 a ton.
Prices May 7 April 30
Indonesia - Grade 4 FOB Lampung (US$/T) 1,400/480 1,350/400
Vietnam - Grade 2 FOB Saigon (US$/T) 1,400 1,300/400
Thailand - Robusta FAQ/FOB Bangkok (US$/T) 1,500 1,375/450
Laos - Robusta FOB Bangkok (US$/T) 1,600 unq
Papua New Guinea (PNG) - Robusta (kina/kg) 178 170
PNG - Arabica 'A' Grade (Kina/kg) FOB Lae 4.88 4.64
PNG - Arabica 'X' Grade (Kina/kg) FOB Lae 4.56 4.30
PNG - Arabica 'Y' Grade (Kina/kg) FOB Lae 4.24 3.94
India - Arabica PB Grade (rupee/kg) 141-142 141-142
India - Arabica A Grade (rupee/kg) 140-141 140-141