Indonesia’s Coffee Deliveries Seen by Volcafe Jumping After Eid

Source: Bloomberg

Coffee deliveries from farms in Indonesia, the world’s third-biggest robusta grower, jumped this week as activity returned after the Muslim holiday of Eid, according to Volcafe, a unit of commodities trader ED&F Man Holdings Ltd.

Bean arrivals were about 13,000 to 14,000 metric tons this week, the Winterthur, Switzerland-based trader said in a report e-mailed today. That compares with 2,500 to 3,000 tons a week earlier. Indonesia is harvesting its 2013-14 crop that started in April and production will fall 12 percent to 9.2 million bags, the U.S. Department of Agriculture estimates. A bag of coffee weighs 132 pounds. Eid is the festival that marks the end of the fasting month of Ramadan.

“Local activities slowly restarted after the Ramadan celebrations,” Volcafe said. The local industry is “actively buying again,” with prices at 19,250 rupiah ($1.85) a kilogram (2.2 pounds) to 20,500 rupiah a kilogram.

Buyers of coffee from Indonesia for shipment in September and October were paying a premium of $120 a ton over the futures on the NYSE Liffe exchange in London, according to Volcafe. That compares with $110 a ton last week.

Indonesia’s coffee shipments climbed 74 percent to 194,781 tons in the January to July period, Volcafe said. Exports in July amounted to 48,525 tons, compared with 39,832 tons a year earlier.

In Vietnam, the world’s leading robusta producer, local prices are still “expensive” and farmers are holding back beans before the start of the 2013-14 season, according to the report.
Premium

Vietnamese beans for shipment in September and October were at a premium, or differential, of $90 a ton to the exchange price, data from the trader showed. That’s unchanged from last week. Differentials refer to a discount or a premium paid to obtain physical coffee in relation to futures prices.

“Everyone is watching and waiting for the new crop, expecting differentials to weaken further to negative levels versus Liffe,” Volcafe said. “Although there is decent interest for new crop, levels are still too far apart.”

Robusta coffee for delivery in November was 0.8 percent lower at $1,902 a ton by 3:17 p.m. in London.

To contact the reporter on this story: Isis Almeida in London at ialmeida3@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net