Shortage, new demands boil Asian coffee prices

Shortage, new demands boil Asian coffee prices

KUALA LUMPUR (Reuter): Asian coffee bean prices are on the boil again as domestic demand in Indonesia heats up, world supply of robusta beans tightens and the market awaits the arrival of the new Vietnamese crop, regional traders and analysts said this week.

In Indonesia, the world's third-largest producer of mainly robusta beans, the harvest is about 75 percent over, while the new crop from Vietnam, another key producer, is expected to come on stream by the end of the month, they said.

Supplies have shrunk in Indonesia where a local exporter with a contract to supply Algeria is snapping up domestic beans at premium prices, a local trader with a European firm said.

"The Prasida group has been paying premium prices in some locations to secure supplies for export to Algeria and this is driving up prices and affecting supply," said the trader.

One grade of Indonesian robusta coffee is being offered at around US$3,700 to $3,800 a ton, up by about $300 to $400 a ton from late last month, traders said.

The Indonesian trader estimated that up to 190,000 tons had already been sold from an anticipated national harvest of around 320,000 tons this year.

"Local consumption is about 100,000 tons and that would leave us only about 40,000 tons, plus 20,000 tons carry over from last year for sale to the world market," he said.

Shortage

A global shortage of robusta beans, with coffee auctions in Brazil on hold, has boosted London coffee futures. November futures hit a two-month high of $3,885 a ton on Monday.

In Vietnam, the imposition on Sept. 1 of an extra 20 percent tax levied on export prices has already driven up bean prices there, traders said.

Vietnamese prices were quoted at about $3,200 to $3,300 a ton last week, but Singapore traders said prices had jumped to about $3,500 to $3,600 now on the tax news.

But there is not much coffee to sell until the new crop harvest begins at the end of September, traders said.

"Everybody is awaiting the arrival of the Vietnamese coffee crop to help ease the tight Asian and the general robusta situation," said a Singapore trader.

With global prices about four times higher than at the beginning of this year, European and American coffee manufacturers, called roasters, are having a tough time replenishing stocks.

"The winter season is coming soon and roasters will start to increase the pace of their activity. With coffee prices rising and supplies being tight, they have a dilemma on their hands now," said a trader.

Not much relief is coming from India, another major Asian producer.

The United Planter's Association of Southern India said it expected only a slight increase in coffee bean production in the 1994-95 season that ends next September.

It put the new harvest at 180,000 tons against 170,000 tons in the 1993-94 season.