Robusta coffee's rise seen sparking local bean sales in Vietnam

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Higher robusta coffee futures have sparked more sales in Vietnam, the world's largest producer of the beans used in instant coffee, according to Volcafe, a unit of commodities trader ED&F Man Holdings Ltd.

Robusta coffee futures traded on NYSE Liffe in London climbed 2 percent this week on speculation Vietnamese farmers will continue to hold back beans. Farmers there are likely to sell about 40 percent of the 2012-13 crop by Tet, the country's Lunar New Year celebrated next month, Amsterdam-based trader Nedcoffee BV estimated this week. Farmers usually sell about 50 percent of the crop by then, according to Nedcoffee.

"The rising Liffe market encouraged producers to increase sales this week in the local market," Winterthur, Switzerland- based Volcafe said in a weekly report e-mailed today. "However, we have not seen a selling rush on the export market."

Buyers of coffee from Vietnam were paying the same price as on NYSE Liffe in London, unchanged from the previous week, data from the trader showed. Beans in the local market rose to VND39,500 ($1.90) a kilogram (2.2 pounds), the highest since Dec. 30, data from the Daklak Trade & Tourism Center on Bloomberg showed.

"Differentials did not budge as this is the traditional time when exporters need to secure supplies for the peak shipment season," which runs from January to April, Volcafe said. "At the same time overseas demand is still brisk."

Differentials refer to a discount or a premium paid to obtain physical coffee in relation to the futures price.

In Indonesia, the third biggest robsuta grower, bean deliveries from farms rose to 900 tons to 1,000 tons this week from 500 to 550 tons a week earlier, Volcafe data showed.

"Local collectors are more eager to release their stock on the back of higher domestic prices," the trader said. Local prices "gradually increased, on rising terminal market."

Robusta coffee for March delivery gained 0.2 percent to $1,982 a ton by 3:45 p.m. in London.

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