 "Asia coffee premiums jump to $200/tonne")
Premiums for Indonesian robusta jumped about $30 in the past week on lingering supply concerns, while a few cargoes of Vietnamese beans changed hands as trading houses covered stocks, dealers said today.
Robusta premiums from top producers Vietnam and Indonesia have rallied to multi-month highs after excessive rains disrupted deliveries from plantations and falling global prices prompted farmers to hold back their beans.
Difficulties in getting beans forced some Indonesian exporters to cancel the shipments of up to 4,000 tonnes of beans so far in June, and negotiations are still underway to prevent more cancellations. Sumatran grade 4, 80 defect beans stood at premiums of $200 a tonne to London's July contract, their highest since early 2012, and from $170 last week.
"If we choose to rush them out, they could default on the shipments and we will have to find replacement beans from Vietnam. That will give us more problems," said the dealer who buys coffee from the two producers.
Washouts, under which sellers pay a penalty to avoid delivery, rattled the nerves of both exporters and buyers, who were having trouble fulfilling forward contracts. Premiums for local beans have risen even though Indonesia's output is forecast to rise by around 30 percent to 11.250 million 60-kg bags in the year to September 2013, according to the International Coffee Organization
In Vietnam, grade 2, 5 per cent black and broken beans, were traded at $90 to London futures, steady from last week. Vietnam robusta is normally sold below London futures, but the beans are now at premiums as farmers hold on to their stocks after global prices tumbled.
"We have bought beans at $90 premiums, and I think trade houses have to purchase them anyway because they have contracts to fulfill," said another dealer in Singapore. "Vietnam still has a lot of coffee, so I don't think they will default on the shipments. What they are doing now is adjusting the differentials. I heard Vietnam still has 200,000 tonnes of coffee."
September robusta on Liffe ended down $24 at $1,725 a tonne on Wednesday. The contract fell to $1,704 on June 14, the lowest for the second month since Oct. 2010, after New York arabica sank due to pressure from Brazilian off-year crop. Up to 100,000 tonnes of bean shipments from Vietnam were delayed or defaulted in the season ending September 2011, partly after exporters refused to deliver on previous deals and instead sought to resell the beans at higher differentials.
Week ahead coffee premiums could stay at the current levels next week, with dealers expecting more delays in shipments from Indonesia if supply constraints worsen.
Robusta premiums from top producers Vietnam and Indonesia have rallied to multi-month highs after excessive rains disrupted deliveries from plantations and falling global prices prompted farmers to hold back their beans.
Difficulties in getting beans forced some Indonesian exporters to cancel the shipments of up to 4,000 tonnes of beans so far in June, and negotiations are still underway to prevent more cancellations. Sumatran grade 4, 80 defect beans stood at premiums of $200 a tonne to London's July contract, their highest since early 2012, and from $170 last week.
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There were no reports of deals. Vietnamese robusta fetched smaller premiums. "Some exporters have asked to delay the shipments of about 2,400 tonnes. They have actually asked for washouts and pay a penalty of $50 a tonne to us, but we don't think it's a good idea because prices in Vietnam are crazy," said a dealer in Singapore.
"If we choose to rush them out, they could default on the shipments and we will have to find replacement beans from Vietnam. That will give us more problems," said the dealer who buys coffee from the two producers.
Washouts, under which sellers pay a penalty to avoid delivery, rattled the nerves of both exporters and buyers, who were having trouble fulfilling forward contracts. Premiums for local beans have risen even though Indonesia's output is forecast to rise by around 30 percent to 11.250 million 60-kg bags in the year to September 2013, according to the International Coffee Organization
In Vietnam, grade 2, 5 per cent black and broken beans, were traded at $90 to London futures, steady from last week. Vietnam robusta is normally sold below London futures, but the beans are now at premiums as farmers hold on to their stocks after global prices tumbled.
"We have bought beans at $90 premiums, and I think trade houses have to purchase them anyway because they have contracts to fulfill," said another dealer in Singapore. "Vietnam still has a lot of coffee, so I don't think they will default on the shipments. What they are doing now is adjusting the differentials. I heard Vietnam still has 200,000 tonnes of coffee."
September robusta on Liffe ended down $24 at $1,725 a tonne on Wednesday. The contract fell to $1,704 on June 14, the lowest for the second month since Oct. 2010, after New York arabica sank due to pressure from Brazilian off-year crop. Up to 100,000 tonnes of bean shipments from Vietnam were delayed or defaulted in the season ending September 2011, partly after exporters refused to deliver on previous deals and instead sought to resell the beans at higher differentials.
Week ahead coffee premiums could stay at the current levels next week, with dealers expecting more delays in shipments from Indonesia if supply constraints worsen.