Buyers of coffee from Vietnam, the world's largest producer of the robusta variety, are paying a lower premium for their beans as gains in futures prices spurred farmer sales, according to Volcafe Ltd.
Vietnamese beans for shipment in June and July are at a premium of $100 a metric ton to the price on the NYSE Liffe exchange in London, Volcafe, the coffee unit of commodities trader ED&F Man Holdings Ltd., said in a report e-mailed today. That compares with $110 a ton last week. Robusta coffee futures climbed as much as 1.2 percent on May 13.
"Liffe's move higher this week triggered farmers and collectors to sell," said Volcafe, which is based in Winterthur, Switzerland. "With farmers and local traders in sell mode, differentials slide a touch."
Differentials refer to a discount or a premium paid to obtain physical coffee in relation to the futures price.
A lack of buying on the export market resulted in shippers offering lower prices, Volcafe said. Farmers will probably sell more if local prices rise to 45,000 dong ($2.15) to 46,000 dong a kilogram (2.2 pounds), Volcafe said. Vietnamese coffee was trading at 42,800 dong a kilogram yesterday, according to data from the Daklak Trade & Tourism Center on Bloomberg.
In Indonesia, the third biggest robusta producer, buyers are paying a higher premium as exporters and the local industry need to buy, according to the report. Deliveries from farms were 5,000 tons to 5,500 tons this week, up from 4,000 tons to 4,500 tons last week, according to Volcafe.
"Despite the increase in coffee availability, internal differentials have tightened due to shorts of both exporters and local industry and higher local prices," the trader said.
Indonesian beans for shipment in June and July were at a premium of $110 a ton to the exchange price, up from $100 a ton a week earlier, Volcafe data showed. Local prices were 19,400 rupiah ($1.99) to 21,000 rupiah a kilogram, the trader said. That compares with 19,300 rupiah to 20,600 rupiah last week.
Robusta coffee futures for July delivery dropped 0.4 percent to $2,038 a ton by 3:41 p.m. on NYSE Liffe in London.