Vietnam’s Domestic Coffee Price Beats Export Levels on Crop End

Farmers in Vietnam, the world’s biggest robusta coffee grower, are charging more for their beans than the current export price as the crop is near the end, according to trading company NC Group Ltd.

Coffee prices in the local market are about $21 a metric ton more expensive than what trade houses are charging in the export market, Nguyen Chi Cuong, chief executive officer at the company, said by e-mail from Ho Chi Minh City, Vietnam today. Vietnamese coffee was at 44,400 dong ($2.13) a kilogram, while export prices were at a premium of $20 a ton to the September contract on NYSE Liffe, he said. Export charges are usually $40 a ton, according to Nguyen.

Domestic prices usually become higher than export levels at end of crop, when there isn’t much stock left in farmers’ hands and good stockpiles in traders’ warehouses, he said.

Coffee exports from Vietnam totaled 16.25 million bags from the start of the season in October to May, according to the International Coffee Organization in London. That compares with 12.55 million bags in the same period a year earlier. A bag of coffee weighs 60 kilograms (132 pounds).

Vietnamese exporters will need to buy back coffee from international trade houses to fulfill their contracts, Nguyen said. The buyback will be “less severe” than in previous years as exporters refrained from making forward sales, he said.

NC Group was established in 2004 and trades natural rubber and coffee. The company has a registered office in New York and bases its trading desk in Ho Chi Minh City. It sells 80,000 to 150,000 bags of coffee a year. Nguyen was previously a coffee trader in Vietnam with Noble Group Ltd.

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.

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