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.