Vietnam coffee prices fall as plan to stockpile beans lags

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Coffee prices in Vietnam fell on Tuesday, weighed down by losses on international markets and the slow implementation of a Vietnamese government-backed plan to stockpile beans, traders said.

Sluggish trading in the past month due to uncertainties surrounding the stockpiling plan would result in a fall in May's coffee shipments from Vietnam, the world's second-largest coffee producer after Brazil, they said.

"Companies have not started really buying for stockpiling because many of them have not even been able to touch the funds for the plan," a trader in Ho Chi Minh City said.

A Vietnamese bank official in the city, Vietnam's largest coffee trading market, said many exporters still have huge debts, which prevents them from being able to access fresh funds.

The government, which approved a plan for exporters to buy 200,000 tons over a three-month period ending July 15 and hold the stock through Oct. 15 to shore up prices, has assigned top lender Agribank to fund the purchases.

But industry officials gathering at an Agriculture Ministry meeting last week in Hanoi also said companies had not been able to access the money, with one official estimating that purchases for stockpiling could only start in earnest in early June at the earliest.

Traders said international prices, which briefly gained last month due to support by Vietnam's decision on the stockpiling plan, have retreated because of news of a larger crop in top producer Brazil and the impact from the euro zone debt issue.

The July robusta contract LRCc2 lost $24 to close at $1,352 per ton on Monday.

Brazil's marketing year 2010/2011 coffee output would rise to 55.3 million 60-kg bags, from 44.8 million bags in the previous crop, and the export would jump 10 percent to 32 million bags, a U.S. Department of Agriculture report said on Monday.

The larger crop, coupled with a new harvest arriving in rival robusta producer Indonesia, has pressured Vietnamese prices, which fell to VND24,000-24,200 ($1.27-$1.28) per kg on Tuesday from VND24,800-25,000 a week ago.

Export quotes of robusta grade 2, 5 percent black and broken beans ranged from a level on par with London to a discount of $30 to the July contract, while bids were seen at $45-$50 a ton.

"Farmers are not willing to sell now due to low prices," a second trader said.

Coffee growers, whose cash demand rises before the harvest and during the watering season from February through April, have said they were more likely to sell at VND25,000 per kg or more.

Coffee shipments this month could fall to 80,000 tons, due to thin trade in recent weeks, after an estimated 130,000 tons had been shipped in April, the second trader said in a view that echoed predictions by others of a lower loading volume for May.

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