Indonesia Coffee Shippers Seen by Nedcoffee Adding Stocks

Exporters in Bandar Lampung, Indonesia, the world’s third-largest grower of robusta coffee, are stocking up on beans as this season’s crop is expected to be smaller than last year, according to trader Nedcoffee BV.

“All the exporters in Bandar Lampung are building their stock by buying aggressively,” the Amsterdam-based trader said in a monthly report e-mailed today.

Total stockpiles held in warehouses in Bandar Lampung, where Indonesia’s main coffee export port is located, were about 55,000 metric tons at the end of May, Nedcoffee said. The robusta coffee crop in southern Sumatra, the country’s main growing area, will be 16 percent smaller in 2014-15 compared with a year earlier, the trader said by e-mail, reiterating an April estimate.

Bean deliveries to Bandar Lampung are about 14 percent higher in the 15 weeks since the first new crop delivery compared with the same period last year, according to the report. Total exports of southern Sumatra robusta reached 12,000 tons in May, about 59 percent lower than in the same period last year, the trader said. Robusta beans are used in instant coffee and espresso.

Deliveries from Indonesian farms are “not as bad as people thought,” Nedcoffee said. About 26 percent of the southern Sumatra crop has been delivered or sold by farmers and middlemen, the trader estimated.

“Currently farmers still hold their crops because of the lower terminal market,” Nedcoffee said. “We estimate that the farmers will start to sell their crops from next month” when fasting during Ramadan and Eid celebrations will boost demand and the harvest of the high-land crop, the biggest, is expected to pick up, it said.

Coffee Premium

Indonesian coffee for shipment in July and August was trading at a premium of $60 a ton to the price on the NYSE Liffe exchange in London at the end of last week, Volcafe, the coffee unit of commodities trader ED&F Man Holdings Ltd., said in a weekly report e-mailed on June 13.

Farmers in Vietnam, the world’s largest robusta grower, are also holding back the beans waiting for higher prices. They slowed sales to 70,000 tons last month, according to Nedcoffee. Vietnamese farmers have sold 77 percent of the total crop, the trader said in an e-mailed response to questions.

“Vietnamese differentials have increased a lot as there are practically no flows at origin. The remaining coffee is in very strong hands and will probably be released at levels closer to previous highs,” Nedcoffee said.

Vietnamese coffee for shipment in July and August was trading at a premium of $30 a ton to the futures price in London at the end of last week, according to Volcafe.

Robusta coffee for delivery in September closed little changed at $1,999 a ton on NYSE Liffe in London.

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