Vietnam sells most of its coffee: Official

Vietnam sells most of its coffee: Official

HANOI (Dow Jones): Vietnamese coffee traders have sold almost all of the 90,000 tons of coffee which they kept as the second part of a 150,000-ton retention plan, an official said Friday.

According to Le Xuan Nhan, deputy chairman of Vietnam Coffee & Cocoa Association, or Vicofa, traders have slowly sold their stock over the past month since Hanoi allowed them to release beans in to the market.

He said that almost all of the coffee beans kept under the country's retention plan have now been released.

"With the government's permission, we released the stock earlier than intended and because market prices are low now, we are selling (the beans) gradually" to avoid putting further pressure on prices, Nhan said.

Global coffee prices are at all time lows, and many international traders attribute that fact to massive Vietnamese production, among other factors. In response, the Association of Coffee Producing Countries, or ACPC, last year agreed to retain 20 percent of their combined output in a bid to push up prices.

Vietnam isn't a member of ACPC, but agreed to support the plan. Last October, it told traders to hold a mandatory 60,000 tons of beans, and in February this year suggested they also retain a further 90,000 tons to support the plan.

The beans came from Vietnam's 2000-01 crop, which is estimated to total 800,000 tons.

Hanoi in April instructed companies to release the first 60,000 tons from warehouses. Nhan said traders have now released all of those stocks.

Despite plans to keep the remaining 90,000 tons in storage until Aug. 15, the government in July said traders were free to sell in order to avoid unnecessary losses as prices fall ahead of the beginning of Vietnam's new crop season.

Vietnam's coffee season runs from October to September.

"We have to sell our stock in order to prepare warehouses for the next crop which will start in October," a trader with Ban Me Thuot Coffee Import-Export Co. said.

Nhan said Vietnamese traders are currently selling at between US$360 and $370 a ton, free on board Saigon port. He said they sold around $440/ton before the retention plan began.

Official statistics show that Vietnam shipped 597,000 tons of coffee valued at $274 million in the first seven months of this year. These figures represent an on-year increase of 48.5 percent in volume. But with the falling price of the beans, the country earned 25.9 percent less than in the same period a year ago.

In a new move to push international prices higher, industry officials from Colombia, Mexico, Costa Rica, El Salvador, Honduras and Nicaragua Thursday agreed to destroy low-quality coffee, thus preventing its entry on to the market and cutting annual exports from those countries by around 5 percent.