Vietnam set to extend coffee retention scheme
Vietnam set to extend coffee retention scheme
SINGAPORE (Reuters): The world's second largest coffee
producer Vietnam is set to extend its retention scheme, though
that is unlikely to give much help to the commodity's prices,
hovering near 30-year lows, traders said on Thursday.
Vietnamese exporters are waiting for Hanoi to approve their
decision last week to extend by three months the government-
funded retention scheme for 60,000 tons. The scheme is set to
expire in mid-May.
As part of global efforts to rescue international coffee
prices, Vietnam decided in November to hold back 60,000 tons of
exportable coffee for six months. In February, it decided to
retain an additional 90,000 tons for six months.
But traders in the region were not worried about supply from
Vietnam as there was probably as much as 275,000 tons left in the
country, including 200,000 tons uncommitted.
A small rally in London on Wednesday from a new 30-year low on
Tuesday ignited hopes for a price recovery among suppliers, to
further slow down the flow of coffee, they said.
Yet they saw the benchmark grade two, five percent black and
broken, still traded as cheap as $395-$400 per ton, FOB, for
April/May. Differentials were seen at $170 below London.
"Farmers are selling everyday, but only a small amount. All
the middlemen and rich farmers are holding coffee and waiting for
the prices to go up," said a trader in Vietnam.
In Indonesia, where the harvest is to peak in May or June ,
the flows of coffee have also been slow as the rupiah's renewed
decline raised hopes it would partly offset a sharp fall in
dollar-denominated international coffee prices.
On Thursday, the rupiah slipped through the 11,000 per dollar
level for the first time in five weeks in the face of heavy
corporate demand for dollars.
"It's different from the usual season," said a trader based in
Lampung in Sumatra. "It's been very, very slow."
The trader said most farmers were selling only stocks from the
previous season, which he estimated stood at about 50,000 tons
altogether.
Indonesia's crop for the new year, which began in April, might
also drop as much as 25 to 30 percent from the previous year as
many farmers were not interested in coffee, he added.
Many traders estimated Indonesian 1999/2000 crop at around
410,000 tons.
Traders said Indonesian exporters were offering the benchmark
grade four, 80 defects robusta beans at $130/$140 per ton below
London futures, while buyers were unwilling to pay more than the
prices paid for Vietnamese coffee.