Nedcoffee Sees Indonesia’s Southern Sumatra Robusta Crop Down 9%

Bloomberg - Isis Almeida  Jan 16, 2014 3:25 PM GMT-0200

The robusta coffee crop in southern Sumatra, Indonesia’s main growing area, will be 9 percent smaller in the 2014-15 season compared with a year earlier, according to Amsterdam-based trader Nedcoffee BV.

Output in the area will be about 305,000 metric tons from 335,000 tons in 2013-14, the trader, which has a factory in Lampung, Indonesia, said in a monthly report e-mailed today. The crop in the lowlands, which farmers probably will start to harvest at the end of March, is forecast at 98,000 tons, while output in the highlands, where bean gathering is set to start about May, is estimated at 207,000 tons, the trader said.

“Current weather for the coffee-growing areas is not so favorable because the rainfall is still high,” Nedcoffee said. “The fear is that there is not enough daytime sunlight. This can affect the development of the coffee berries.”

Indonesia has finished gathering both the main and the so-called fly crop, which usually peaks in December or January, for the 2013-14 season in southern Sumatra, Nedcoffee said. The nation is the world’s third-largest grower of the robusta variety used in instant coffee and espresso.

Bean deliveries from farms amounted to about 290,000 tons from the start of the 2013-14 season through to the first week of January, according to the report. Arrivals in Bandar Lampung, where Indonesia’s main coffee-export port is located, were 211,000 tons, while deliveries to areas including Java and north Sumatra came to 79,000 tons, Nedcoffee said.

Vietnam Harvest

While only about 5,700 tons of coffee were delivered to exporters in Bandar Lampung last month, shipments totaled 21,584 tons, according to the trader. That shows “current stocks of exporters in Bandar Lampung have decreased a lot.”

In Vietnam, the biggest robusta producer, harvesting is also over and farmers are now concentrating on selling beans before Tet, the festival starting at the end of this month that marks the Lunar New Year, the trader said. Growers are likely to sell 33 percent of their crop before Tet from an average 43 percent in the past five years, a Bloomberg survey showed.

“We’re now living the usual farmers ‘selling pressure’ before Tet, although the ‘pressure’ is visibly getting a lot milder than before,” Nedcoffee said. “FOB differentials also soften in the process,” the trader said, referring to a premium paid or a discount obtained for physical coffee in the export market in relation to futures prices.

Vietnamese exports in December totaled 118,027 tons, bringing total shipments from the start of the season in October to 265,371 tons, the trader said. Trader stockpiles increased “a little” from two months ago, according to the report.

Busier Month

“January looks like a busier month with some reported shipments to the terminal market, despite FOB differentials still far above tenderable parity,” the trader said.

Tenderable parity corresponds to the price at which traders can either sell in the physical market or ship coffee to be delivered to NYSE Liffe and make the same amount of money. That’s usually measured in the form of differentials.

Farmers in Vietnam are preparing for the first irrigation of the next crop, which should happen before Tet and will trigger more uniform flowerings than in the past two years, said the trader, which also has offices in Ho Chi Minh City, Vietnam. The 2014-15 season there will start in October.

“There are already some encouraging signs of next crop as there are very few early, immature flowerings,” Nedcoffee said. “The outlook of crop 2014-15 is starting on a positive note.”

Robusta coffee for delivery in March gained 2.2 percent to $1,744 a ton by 5:05 p.m. on NYSE Liffe in London, bringing this year’s gain to 3.6 percent.