Vietnam coffee: delays widespread ahead of holidays

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Vietnamese coffee exporters have done little loading in the run-up to next week’s long holiday as low prices discouraged farmers from selling and exporters were short of funds after banks tightened lending, traders said.

Trade in Vietnam has been unusually slow before markets close to mark Tet, the Lunar New Year festival, between Feb. 13 and 18. Farmers normally sell beans for cash in the run-up to Tet. Trading will resume on Feb. 22.

“Prices are falling and exporters say they want a break ahead of Tet,” a Ho Chi Minh City-based trader said Tuesday.

Another trader said foreign companies seemed to be chasing shipments under committed deals. “They do not want new contracts,” he added.

A third trader at a foreign firm estimated as much as a quarter of the volume committed for shipment in January and February, about 70,000 tons, had failed to make it to port out of a total contracted volume of 280,000 tons.

“The total quantity being delayed is larger if you count the amount in trouble since late last year,” he said.

Last month traders said a Vietnamese coffee export company has defaulted on shipments of between 5,000 and 20,000 tons since November after losses on London futures.

Exporters are short of funds because banks have been tightening lending after the central bank set a cap on 2010 credit growth at 25 percent, after it grew 38 percent last year.

Another factor weighing on coffee sales is a government-backed plan to stockpile 200,000 tons to boost prices, even though the government has yet to rule on how the plan would be implemented, traders said.

They said the government was expected to finalise the plan after the Lunar New Year festival.

With few quotations this week, Vietnamese robusta grade 2, 5 percent black and broken, was priced at $1,310-$1,320 a ton for spot shipment, free-on-board basis, or $10-$20 a ton below London May contract, while bids stood at $40-$50 a ton below.

Last week foreign buyers offered a $40 a ton discount to the May contract.

On domestic markets, robusta beans fell to VND23,150-23,500 per kg on Tuesday in the main growing province, Daklak, from VND23,600-23,800 last Tuesday.

Prices are now slightly above a low of VND23,000 last seen in the week of Nov. 16-20, 2009 at the peak of the October 2009 to September 2010 harvest.

“Exporters have said they could sell at $1,300 a ton, but now the price is there they still do not want to sell,” the first trader said, adding that trade could pick up after Tet.

Vietnamese coffee growers need cash to buy fuel for watering trees in the new production cycle. Watering lasts from now through April, the peak of the Central Highlands’ dry season.

Source: Reuters

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