Vietnam coffee premium said to drop as much as 18% in two weeks

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The premium buyers are prepared to pay for coffee in Vietnam fell as much as 18 percent in the past two weeks as roasters turned to beans stored in Europe, three traders said.

Vietnamese coffee cost $140 to $150 a metric ton more than prices on NYSE Liffe in London, according to the people, who declined to be identified because they aren’t authorized to speak to the media. That’s below the $170 reported on July 22 by Volcafe, the coffee unit of ED&F Man Holdings Ltd.

Robusta inventories with valid grading certificates in warehouses monitored by NYSE Liffe fell 1.7 percent to 410,140 tons in the two weeks to July 25, signaling demand for beans stored in Europe. Stocks almost doubled this year from 216,880 tons on Dec. 27, exchange data showed. Prices slid 16 percent, the most since October 2008, on NYSE Liffe last month.

“The cash prices have been firm for such a long time now, but this tightness has only been played out on the physical market and not on Liffe,” Kona Haque, an analyst at Macquarie Group Ltd., said by phone from London. “Any reduction in Liffe stocks will help top up Liffe futures.”

Coffee from Vietnam is now cheaper at European ports than in the Southeast Asian nation’s export market, three people involved in the trade said Aug. 3. Prices in the Belgian port of Antwerp were $105 to $150 a ton above NYSE Liffe, according to the people. Vietnam is the world’s biggest robusta grower.
Container Rates

Shipping coffee to ports in northern Europe from Ho Chi Minh City costs $1,250 for every 20-foot container, each holding 15 to 18 tons, according A.P. Moller-Maersk A/S, owner of the world’s biggest container-shipping line. That corresponds to about $69 to $83 a ton.

Farmers and exporters in Vietnam may be holding 1.2 million to 1.3 million bags of coffee, Ratzeburg, Germany-based researcher F.O. Licht said in a report covering the July 18 to Aug. 3 period. Vietnamese exporters delayed or canceled as much as 60,000 tons of shipments in the past two months, said Geneva- based coffee trader Sucafina SA.

That helped lift prices in the physical market. Vietnamese coffee was at a discount of $140 to NYSE Liffe prices in February, according to Eugen Atte GmbH, a Hamburg-based broker.

Robusta prices may decline in the fourth quarter as producers in Vietnam start to hedge the new crop from October, Macquarie’s Haque said. The country’s coffee output will increase 10 percent to 20.6 million bags in the coming 2011-12 season, U.S. Department of Agriculture data show.

Robusta for September delivery rose $23, or 1.1 percent, to $2,068 a ton by 3:54 p.m. London time on NYSE Liffe. The beans gained 19 percent in the past year.

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