Vietnam Coffee-Delays emerge, trade dull as prices drop

HANOI: Vietnamese coffee exporters have delayed loading of around 40,000 tonnes, or nearly 670,000 bags, due to thin domestic stocks and a jump in local market prices beyond export levels, traders said on Tuesday.

The delayed volume in Vietnam, plus up to 12,000 tonnes in shipment cancellations in Indonesia, may pile pressure on the buyers involved but would not reverse a price fall in London following favourable crop weather in top producer Brazil.

Vietnam and Indonesia are the world's largest producers of robusta coffee, altogether accounting for 20 percent of global output in the current 2010/2011 crop, based on the International Coffee Organization's (ICO) May report.

Around two thirds of the volume were delayed by two exporters, including a major company in the Central Highlands coffee belt, while several smaller firms made up the remaining quantity, traders in Ho Chi Minh City said.

The export volume at risk is equivalent to 30 percent of the 2.2 million-bag average monthly volume shipped by Vietnam, the world's largest producer of robusta beans.

"Some of these 40,000 tonnes could face washouts, but the final volume of defaults is not clear yet as it depends on companies talking with each other," a trader said.

The volume is part of the 100,00 tonnes due for loading since May, based on an estimate by a senior Vietnamese industry official last month.

Vietnam, which accounts for 14 percent of global output, may have 2.5 million bags left from the latest harvest of 22 million bags as estimated by traders, Reuters calculations show.

Coffee prices in Vietnam have risen by nearly a third so far this year from the end of 2010, based on Reuters calculations, making it difficult for several exporters to secure beans from domestic markets for delivery, traders said.

PRICES AT PREMIUMS

Last month Vietnamese robusta beans were traded at premiums to London prices for the first time since mid-2010, as stocks tightened after strong exports in the first months of this year.

Robusta beans stood at 48.7-48.9 million dong ($2,370-$2,380) per tonne in Daklak, the country's top growing province, on Tuesday, up from 37.1 million dong on Dec. 31, 2010.

But prices eased around 4 percent from 50.6-51 million dong a tonne last Tuesday after London robusta futures fell following a sharp setback in ICE arabica coffee and overall weakness in commodity markets.

"Buying demand is thin, and with the price drop exporters have not made any quotations today," another trader said.

The first trader said buyers of Vietnamese coffee could now switch to buying directly in Europe, instead of taking more expensive beans from Vietnam.

Indicative offers of Vietnamese robusta showed a premium of $100 per tonne to London's September contract , unchanged from last Tuesday, but no deals were seen, traders said.

It meant that robusta grade 2, 5 percent black and broken was priced at $2,454 a tonne, free-on-board, from $2,470 last Tuesday.

"Buyers now could only be in Asia and are likely those who have to fill in the volume delayed so far by Vietnamese exporters," the first trader said.

Local Coffee Exporters Worry about Dominance of Foreign Traders

Local Coffee Exporters Worry about Dominance of Foreign Traders
Monday, 20 June, 2011 | 22:09 WIB

TEMPO Interactive, Jakarta:Coffee exporters worry that foreign traders will dominate the local coffee trading in the absence of export levies which makes coffee, one of Indonesia's mainstay commodity, easily shipped overseas.

Benny Hermanto , the Association of Indonesian Coffee Exporters and Industries (AICE) Research chief, said that the government has removed export levies through Trade Minister Regulation No. 10/2011. Prior to that, the coffee export duty was Rp30 per kilogram.

"Now, foreign traders only need to come, bring their dollars, rent a warehouse, and export coffee," said Benny yesterday. According to Benny, the absence of the levies will result in more Indonesian coffee being exported in raw form.

According to Benny, coffee exporters' fee is still needed to be paid to the International Coffee Organization (ICO). This fee is charged to the government because members of ICO are countries instead of companies.

Benny said that the coffee export levies paid to the government is beneficial for the businessmen because the shifting of the coffee export value will sometimes result in a surplus of export levies. This surplus will be returned to the AICE.

Currently, coffee production is declining. Last year, production only reached 640,000 tons, while this year the yield is estimated to be only about 600,000 tons.

The decline in coffee production also impacted exports. In 2010, exports reached 410,000 tons and this year, the number is estimated to be about 390,000 tons.

Suyanto Husein, the AICE chairman, said that the government cannot limit coffee purchases by foreign traders, so, the market is more open to Indonesian products compared to coffee products from other countries.

Earlier, exporters must report their export value to the AICE to obtain recommendation when paying the export levies. Now, foreign traders can go directly to farmers without having to be an AICE member.

Therefore, the exporters ask the government to limit purchases by foreign buyers such as by implementing a regulation which requires the foreign traders to work with local businessmen.

Bayu Krisnamurthi, the Agriculture deputy-minister, said that the coffee supply needs to be well-managed in order to maintain the price. He hoped that the Indonesian farmers will grow more coffee for direct consumption because the price is higher.

EKA UTAMI APRILIA

Govt Studies Exports to the Netherlands

Govt Studies Exports to the Netherlands
Friday, 08 July, 2011 | 13:08 WIB

TEMPO Interactive, Jakarta:The government is studying exports to the Netherlands. The trade potential between both countries is predicted to be larger following the signing of an MoU.

The export collaboration includes products such as chocolate, coffee, tea, spices, palm oil and fish. Dutch European Affairs and International Cooperation spokesman Ben Knapen said Indonesia had much potential in the agriculture and fisheries sector.

"This can help the Netherlands cope with the food crisis, which is predicted to occur in 2050," he said yesterday.

The Netherlands has disbursed US$2 billion to import the commodities. All European countries have spent US$12 billion to import these products. Knapen said the cooperation would widen the Indonesian market in Europe.

Trade Minister Mari Elka Pangestu welcomed the program. She said Indonesia fully supported it to manage the anticipated global food crisis. "The cooperation benefits both parties," she added.

Maritime and Fisheries Minister Fadel Muhammad said he was certain the national fisheries products could enter the Netherlands because it met European Union standards.


TRI SUHARMAN

Bigger Coffee Plantations Sought to Boost Production

Bigger Coffee Plantations Sought to Boost Production
June 19, 2011

Coffee growers in Indonesia, the world's third-largest coffee producer, have said they are looking to increase the size of their plantations to help arrest two years of falling production.

By increasing acreage, the growers say they hope to boost output, which is expected to be about 600,000 tons this year, by at least 50 percent by 2021.

"We will cooperate with the relevant ministries to prepare the land required to expand coffee plantations for farmers so that in the coming 10 years, production can reach 900,000 tons to 1.2 million tons per annum," said Pranoto Soenarto, deputy chairman for specialty coffee and industry at the Indonesian Coffee Exporters Association (AEKI).

Although he declined to elaborate on how much land was needed for the expansion, Pranoto said the increased acreage would also lead to better quality beans. "We want to increase the quality and quantity of production by increasing plantation acreage and using organic fertilizers," he said.

Presently, he said, the country's coffee plantations covered 1.2 million hectares, with more than 90 percent being cultivated by small-scale producers.

Production is expected to fall well below previous estimates. Earlier this year, AEKI predicted coffee production would reach 700,000 tons, but that was later revised to just 600,000 tons, 7 percent down on output from 2010.

"Last year, the country's coffee production was about 640,000 tons," AEKI chairman Suyanto Husein said on Friday.

He said unseasonal rains were the main reason for the shortfall. "There is an indication of decreasing production in a number of production centers in various regions due to bad weather," he said.

But he said the dip was also due in part to lagging efforts to rejuvenate old plantations and launch intensification programs, which was why AEKI supported expanding acreage to increase production.

Aside from the drop in production, AEKI has also predicted a decline in the country's coffee exports this year.

The association said exports in 2011 would reach only about 390,000 tons, down from last year's figure of more than 440,000 tons.

But while the decline in production was a factor in the decrease in exports, Suyanto said the drop was also caused by increased domestic consumption.

According to AEKI data, coffee bean exports for 2010 reached 443,969 tons, worth $791.76 million. The association, however, had predicted early last year that export volumes for 2010 would drop to 325,000 tons, worth $650 million per annum, from 400,000 tons, at $773 million.

Indonesia's traditional coffee export markets, especially for robusta coffee, include Japan, South Africa, Europe and South and Central American countries. Its arabica coffee, meanwhile, was mainly exported to Germany and the United States.

Indonesia's competitors for arabica are Brazil, Columbia, Mexico, Costa Rica and El Salvador. Its main competitor for robusta is Vietnam.

Vietnam is the biggest robusta exporter in Asia, while the world's biggest arabica exporters are largely comprised of Latin American countries.

Indonesia's robusta is produced in the provinces of Bengkulu, South Sulawesi and Lampung, while arabica is found in Aceh and North Sumatra.

About 80 percent of the contry's coffee exports are robusta, the remainder being arabica.

Aside from arabica and robusta, however, Indonesia is well-known for producing other types of specialty coffee, like Toraja, Aceh, Mandailing and luwak (civet cat) coffee.

Indonesia is regarded as the world's third largest coffee producer after Brazil and Vietnam.

Bucking the trend for declining production, coffee consumption in Indonesia is expected to continue to rise. Suyanto said domestic consumption, which reached 190,000 tons in 2010, would be 210,000 tons this year.

"The trend in domestic coffee consumption has seen increases of around 20 percent a year, but this is not always reflected," he said.

He said this happened because many Indonesians consumed coffee that was mixed with other ingredients. "It is not pure coffee," he said. "Some mix it with corn."

Pranoto, meanwhile, said the increase in coffee consumption was not only happening in Indonesia but was a worldwide trend. This may push up the price of coffee, he said, since production had been unpredictable and was dependent on climate.

Antara