The premium for robusta coffee delivered in March over May dropped another 22 percent today as farmers in Vietnam, the world’s biggest grower of the beans, resumed sales to take advantage of higher prices.
Beans for March delivery were $102 a metric ton more expensive than May-delivered coffee by 4:22 p.m. on NYSE Liffe in London, data on Bloomberg show. That’s down 22 percent from yesterday and 38 percent from two days ago.
Robusta coffee has jumped 18 percent this year, exceeding all but silver of 24 commodities in the GSCI gauge of raw materials. The March contract went from being $10 a ton cheaper than the May contract on Feb. 8 to $164 a ton more expensive five days later, triggering speculation that there was more interest in taking a delivery of beans. The first notice of delivery for the March contract is March 1.
“The price difference between March and May has started to come down, showing that there is definitely coffee in Vietnam, and producers want to sell but aren’t finding the demand,” said Oscar L. Schaps, managing director of global soft commodities at INTL FCStone Inc. in Miami. “People have already started talking about delivering into the market.”
NYSE Liffe has proposed limits on deliveries in its London commodity futures. That would prevent buyers from taking more than 75,000 tons of coffee. Limits would also be imposed for cocoa, white sugar and feed wheat.
Vietnam’s coffee exports fell 48 percent to 112,182 tons in January, according to government figures. Farmers there had sold about 35 percent of the crop before the Tet holiday, down from an anticipated 50 percent, according to broker Marex Spectron Group in London. The Tet festival, which marks the Lunar New Year, ran from Jan. 23 to Jan. 27.
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.