Indonesia Coffee Sales Seen Slumping as Beans Rot in Rain

Photographer: Dimas Ardian/Bloomberg

A worker displays a handful of Robusta coffee berries that were collected on a coffee plantation in Tanggamus, Lampung Province, Indonesia, on May 30, 2013. Close

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Photographer: Dimas Ardian/Bloomberg

A worker displays a handful of Robusta coffee berries that were collected on a coffee plantation in Tanggamus, Lampung Province, Indonesia, on May 30, 2013.

Coffee shipments from Indonesia, the third-largest producer of the robusta variety, will probably drop the most in six years as wetter-than-usual weather rots beans and cuts the harvest.

Sales may plunge 19 percent to 6 million bags this year, according to the median of estimates from seven exporters compiled by Bloomberg. That’s the biggest drop since at least 2007, according to data from the Central Statistics Agency. Output may slide to 9.58 million bags from 11.04 million, the median of eight shipper estimates shows. Exports were forecast at 6.42 million bags and output at 9.92 million bags in a June survey. A bag weighs 60 kilograms (132 pounds).

Reduced supplies from Indonesia, where the harvest began a month later than usual in May, comes at a time when farmers are slowing sales in Vietnam, the top grower of robusta beans used by Nestle SA. (NESN) That could extend a rally in prices from a 32-month low in June. Deliveries from farms in Indonesia are down 28 percent from last season because of the wet weather, according to Amsterdam-based trader Nedcoffee BV.

“Beans are rotting or turning black,” said Moelyono Soesilo, a manager at Semarang, Central Java-based trader PT Taman Delta Indonesia. “Most farmers rely solely on the sunlight for drying, and it’s raining almost every day now.”

Robusta futures have climbed 12 percent to $1,915 a ton on the NYSE Liffe from $1,704 on June 14, the lowest level since October 2010. Prices may advance to $2,100 by the end of 2013, Mathijs Deguelle, a soft commodities & food analyst at ABN Amro Bank NV, said in a July 25 report.

Deliveries Decline

Exports from Vietnam may drop 21 percent to 90,000 tons this month from July 2012, General Statistics Office data show. Farmers slowed sales to boost premiums over futures before they start collecting the second-biggest crop ever in October.

Bean deliveries to Bandar Lampung, Indonesia’s main coffee shipment port, totaled 77,719 tons from the start of the season through July 5, Nedcoffee said July 16. That compares with 108,342 tons a year earlier. Daily arrivals to warehouses in Lampung averaged 3,000 tons in the week to July 19, down from 5,000 tons in same period last year, said Soesilo of Taman Delta. Some of these warehouses have ovens for drying cherries.

“If beans can be delivered quickly to the exporters’ warehouses, they can use the oven, which is the only way to maintain quality,” said Mochtar Luthfie, head of research and development at the Lampung chapter of the Association of Indonesian Coffee Exporters and Industry. “Even if that can be done, it may only help a bit as there aren’t enough ovens.”

Excessive Rain

Rainfall in Lampung, Bengkulu and South Sumatra provinces, which account for about 75 percent of the output and sales from the country, has been higher than a 30-year average in June and July, Nurhayati, head of agro and maritime climate at the Meteorology, Climatology and Geophysics Agency, said by phone July 24. Excessive rain may persist until August, the agency said last month.

“This is really bad, it’s just like 2010 all over again,” Soesilo said by phone on July 23, referring to the year when wet weather reduced exports by 18 percent to 6.97 million bags, according to the statistics agency.

Persistent rain means most farmers, who dry cherries by spreading them on the ground in the sun, have stopped picking the fruit, said Sunyoto, a farmer at Way Tenong district, West Lampung. Delays in picking hurt the quality and that may prompt some farmers to sell their harvest at a discount, he said.

Exporters are offering beans for August delivery at $100 a ton above prices on NYSE Liffe, down from $150 to $180 in early July, the median of estimates from four exporters showed.

To contact the reporters on this story: Yoga Rusmana in Jakarta at yrusmana@bloomberg.net; Eko Listiyorini in Jakarta at elistiyorini@bloomberg.net

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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