DJ Vietnam Coffee Prices Elevated Despite Slump In London Futures

DJ Vietnam Coffee Prices Elevated Despite Slump In London Futures -Traders SINGAPORE -- Coffee prices in top robusta supplier Vietnam willlikely remain elevated, as thin domestic stocks will help keep prices fairlyunscathed by a 4% drop in bellwether London robusta futures over the last week,trading executives said Wednesday. Vietnam accounts for more than a third of global robusta output, and is apricing benchmark for the Asia-Pacific growers who produce about 60% of theworld's robusta. Indicative export offers for Vietnam's robusta grade 2--with 5% black andbroken beans--are being quoted around $2,400 a metric ton, widening theirpremium to London futures beyond $100 a ton, the trading executives said. Domestic prices are hovering around VND50,000 a kilogram. Domestic and exportprices generally follow each other closely. September London International Financial Futures Exchange robusta settled at$2,296/ton Tuesday, down $95 from a week earlier, primarily due to highersupply with harvest starting in Brazil. The market was also pressured by abroad-based selloff in commodities as the Greek debt crisis continued. Robusta accounts for a quarter of the global coffee market, and while it iswidely considered more bitter and of lower quality than beans of arabicavariety, it is used in many low-cost foods and beverages, as well as somespecialty coffee types. Coffee prices in Vietnam usually track London futures, but a wide spread hasemerged since the bulk of the Southeast Asian nation's coffee output for themarketing year ending Sept. 30 has been exported and domestic stocks are thin,said a trading executive in Dak Lak province. Stocks have dwindled as most growers sold their coffee beans when globalprices were at multi-year highs in March, he said. Some traders in Dak Lak, Vietnam's largest coffee-growing province, estimatestocks held by growers and exporters are well below a U.S. Department ofAgriculture forecast of 300,000 to 350,000 tons made this week. A few exporters who have short positions, or had entered into contracts on adiscount to London and haven't shipped yet, may default or incur financiallosses, as they will have to buy the beans from foreign buyers at a premium,the Dak Lak-based executive said. He said this will also help support prices. Vietnam's harvest next year will likely have a bearish impact on prices, butits output won't hit the market until November, an executive in Singapore said.He added that the spread over London futures will remain high until then. According to the USDA, Vietnam's coffee output next year will likely rise 10%to 20.6 million 60-kilogram bags, due to higher investment in production andincreasing yields. Vietnam exported 10.02 million 60-kilogram bags in the October-March period,17% higher on year and more than half of its forecast output, the USDA said,citing data from Vietnam's General Customs Office.