Coffee premiums narrow in Vietnam but rise in Indonesia

HANOI - Coffee premiums in Vietnam narrowed as farmers held back stocks expecting a further jump in robusta prices, but were up in Indonesia on thin stocks and local demand, traders said on Thursday.

Premiums for Vietnamese robusta grade 2, 5 percent black and broken narrowed to $50-$60 a metric ton to the July ICE contract from $50-$70 a week ago.

Robusta rose to 31.5 million-31.8 million dong ($1,413.19-$1,426.65) per metric ton in Daklak, the country's top growing province, from 31.1 million-31.4 million dong last Thursday, tracking gains in the ICE robusta futures.

ICE May robusta coffee settled up 0.21 percent at $1,426 per metric ton on Wednesday.

"Sales are a bit slower today as farmers expect further climb in prices," said independent analyst Nguyen Quang Binh.

The dry season is at its peak in Vietnam's Central Highlands coffee belt, affecting nearly a fifth of the coffee farms, according to an industry report. The rainy season could arrive 10-15 days later than usual this year.

Vietnam, the world's largest robusta producer, exported 119,000 metric tons (1.98 million 60-kg bags) of coffee in February, down 30.1 percent from the previous month, customs data showed on Monday.

In Indonesia, premiums rose to $300-$350 a metric ton for beans grade 4, 80 defects <COFID-G4-USD> to the ICE May contract, from $300-$320 last Thursday, due to thin stocks, traders said.

"There is little in the way of stocks (but) there's high domestic demand from grinders in Java, along with exports by individuals," a Lampung-based trader said.

The country's main harvest will pick up from late March.

Indonesia's coffee bean production is expected to increase by up to 27 percent to 700,000 metric tons in 2016, a manager at the country's coffee association said on Thursday, up from 550,000 metric tons in 2015.

By My Pham/Reuters

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