Vietnam, Indonesian coffee premium seen falling as futures climb

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The premium buyers pay for coffee from Vietnam, the world's largest grower of robusta beans, and Indonesia fell over the past week as futures climbed, according to Volcafe Ltd., owned by ED&F Man Holdings Ltd.

Vietnamese beans for August and September shipments were $40 a metric ton above the price on NYSE Liffe in London, down from $80 a ton a week earlier, Winterthur, Switzerland-based Volcafe said in a report e-mailed Friday. Indonesia coffee for the same period was down to $30 a ton from $70 a ton, it said. Robusta coffee has climbed 6.4 percent this week.

Prices paid to farmers in Vietnam climbed to VND43,000 ($2.06) a kilogram (2.2 pounds) this week, the trader said. Farmers had been waiting for that price to sell beans. Indonesian beans cost 19,000 rupiah ($2.01) to 20,200 rupiah a kilogram, it said, citing "good" buying by local roasters.

Bean arrivals at ports in Indonesia were 9,500 tons to 10,500 tons this week, according to Volcafe. That's down from 12,750 tons to 13,500 tons last week, the trader said in a report e-mailed July 13.

"Ramadan started, and public life slowed," Volcafe said. "Scattered rains were reported across some coffee growing regions, which reduced drying and arrivals."

The crop in India will probably be 2 percent to 3 percent smaller than initial market estimates because of insufficient rains, according to the report. While Volcafe estimated in May a crop of 6 million bags in India for the 2012-13 season, the US Department of Agriculture sees production at 5.1 million bags. A bag of coffee weighs 60 kilograms (132 pounds).

"In Karnataka, the state with more than 50 percent of India's coffee planted area, accumulated rainfall in the last six weeks has been half the normal levels," Volcafe said. "In the world's fourth largest robusta producer, these are not ideal conditions for the bean swelling stage."

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