Japanese coffee buyers face supply shortages

Japanese coffee buyers face supply shortages

TOKYO (Reuters): Japanese coffee bean buyers may face a supply
shortage if Indonesia's political upheaval causes further delays
in shipments ahead of the peak demand season for coffee, traders
said yesterday.

"Unless the situation in Indonesia calms down within the next
week or two, we will face a serious situation," said a trader at
a leading trading house.

"We are closely watching the situation in Indonesia as Japan
has a substantial amount of coffee bean contracts with the
country," the trader said.

Traders said expected delays in shipments from Indonesia, hit
by a political turmoil after 32 years of President Soeharto's
ruling, might further tighten robust coffee supplies in Japan,
the world's third-largest coffee consumer.

A drought in Indonesia has already delayed the arrival of new
crop coffee bean supplies, causing Japanese warehouse stocks to
fall well below the 70,000-80,000 ton level which industry
sources regard as the adequate level.

Japan's warehouse stocks of coffee beans at the end of March
totaled 58,368 tons, down 12.9 percent from the same month a year
earlier, the Agriculture Ministry said.

Indonesia is the second-largest supplier of coffee beans to
Japan in terms of volume, exporting 67,615 tons to Japan in 1997,
according to Finance Ministry data.

Indonesia supplies robusta coffee beans, which account for
about 30 percent of Japan's total coffee demand.

"Japanese roasters may be forced to cut production if the
situation does not improve," another trading house trader said.

"Coffee production (in Japan) in June and July is usually the
highest throughout the year as demand for chilled coffee grows
during the summer," he added.

Traders said they were deeply concerned about Indonesian
supplies, though so far they had not heard of significant delays
in shipments or any defaults as a result of the turmoil.

A spokesman of major coffee roaster, UCC Ueshima Coffee Ltd
said: "It is inevitable the situation in Indonesia, which appears
to be serious, will hamper coffee bean shipments and export
procedures."

Traders said if the upheaval in Indonesian was protracted,
Japanese traders would need to seek substitutes, probably from
Vietnam which also supplies robusta coffee.