Indonesian Coffee Premium Soars on Concern About Limited Supply

The premium buyers have to pay to obtain coffee from Indonesia, the third-biggest robusta grower, rose seven-fold in a week, with exporters refraining from selling contracts for later dates, according to Volcafe.

Indonesian beans for June and July shipment were at a premium of $70 a metric ton to the price on the NYSE Liffe exchange in London, the coffee unit of commodities trader ED&F Man Holdings Ltd. said in a report e-mailed today. That compares with a premium of $10 a ton in the previous week.

“Differentials have slightly tightened and exporters are only keen to sell for nearby positions as they anticipate that the availability of coffee will diminish around August and September,” the Winterthur, Switzerland-based trader said.

Differentials refer to a discount or a premium paid for physical coffee in relation to the price on the futures market. Bean deliveries to ports in Indonesia this week totaled 7,000 tons to 7,500 tons, Volcafe said.

Indonesia will produce 9.7 million bags of coffee in the 2012-13 season that started there in October, up from 8.3 million bags a year earlier, the U.S. Department of Agriculture said in a report published June 5.

In Vietnam, the world’s largest robusta producer, exporters are waiting for the prices on NYSE Liffe to rise before buying the remainder of the coffee from farmers, resulting in limited flow, Volcafe said. Robusta coffee fell 3.3 percent this month.

Vietnamese coffee for June and July shipments was at a premium of $40 a ton to NYSE Liffe, data from the trader show. That compares to a premium of $10 a ton last week.

“Rainfall for June is lower than previous years,” Volcafe said. “However, crops should be developing well,” the trader said, referring to the 2012-13 crop that starts in October.

Robusta coffee for September delivery rose 0.1 percent to $2,107 a ton by 1:49 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.