Indonesian robusta beans come out, business slow

Indonesian robusta beans come out, business slow

SINGAPORE (Reuter): Indonesian robusta coffee beans are beginning to come out but regional business has slowed sharply as exporters were sidelined by volatile markets in New York and London, regional traders said yesterday.

"The Indonesians are starting to offer more regularly. Two or three weeks ago, you couldn't get an offer. Now, regular offers are coming out of Indonesia," a senior trader for a European commodity house told Reuters.

Robusta exports from the island of Sumatra will probably decline by up to 30 percent, while total coffee exports by Indonesia this year may slide 10-20 percent to around 260,000- 285,000 tons, dealers said.

"Overall, we think the crop should be down 10-15 percent," one dealer said of the Indonesian coffee crop.

Excessive rains and strong winds last year pounded coffee trees. "It knocked off a lot of the flowers," the dealer said. The crop will be in full-swing later this month, coffee traders said.

The price of Indonesia's benchmark Grade 4 coffee, 80 defects, was seen by the trade at around US$1,400-$1,500 a ton FOB Lampung, unchanged from the previous week's quote.

While more Indonesian robusta beans are becoming available, the recent volatility in international coffee markets kept most coffee players glued to the sidelines.

"In the interest of sanity for those of us in this business, they should close down the New York and London coffee markets for a week," one dealer said.

At one point, prices in New York were hovering around 184.00 U.S. cents a lb during trading Tuesday.

"When I looked at it five minutes later, it had gone back up to 194.00 cents," a trader said.

Higher

The London robusta market was seen opening higher later on Wednesday, although regional dealers were divided as to how high it would go.

"I think London may be a little up," one trader said, adding prices for the May futures contract should rise by about $20-$30.

Another dealer said, however, that "London is due $100 up."

The volatility has dampened sentiment in the region and business has slowed down to a crawl as a result.

"It's very, very slow," a coffee trader for a U.S. commodity company said. "It just seems to be very, very quiet at the moment."

Another dealer for a European trading house said the amount of business it has been doing has been sharply lower.

"We've not been doing much business in Vietnam. I don't think there's really a lot of offtake in the market," he said. "Everyone is watching the market and they have decided they don't want any piece of it."

The level of activity has been slow compared to the pace of exports over the last two months when large amounts of Vietnamese robusta beans were being shipped out.

"Vietnam had a very aggressive sales pace," a trader said.

The price of Vietnam's key Grade 2 coffee, 8.0 percent black and broken, was quoted by dealers at $1,380-$1,400 a ton FOB Saigon port against last week's quote of $1,350-$1,400 a ton FOB on the same basis.

With the bull rally in New York and London taking prices to fresh highs, the Thais took advantage by shipping out most of their coffee crop, dealers said.

Out of a total crop of some 60,000 tons, the Thais were said to have sold or committed some 50,000-55,000 tons.

One trader said physical business may remain slow for the next few weeks after roasters and end-users went heavily long during the recent rally in coffee futures to ensure they have ample supplies.

"We could be in for a couple of months of low offtake," the trader said.

The robusta coffee contract in the Singapore Commodity Exchange (SICOM) was untraded on Tuesday. The May contract was indicated at $1,528 a ton. A paltry 18 lots in the coffee contract were traded on Monday, SICOM said.