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.