VNBusinessNews.com – Vietnam’s unsold coffee stocks stand at between 500,000 tonnes and 600,000 tonnes, or 8.3 million to 10 million bags, but sales are expected to pick up in coming weeks, traders said on Wednesday.
Slow physical trade during the harvest in Vietnam, the world’s top robusta producer, has raised concern about a possible build-up in stocks, which could weigh on London futures when holders eventually release the beans, they said.
One trader at a foreign company in Ho Chi Minh City put stocks at 600,000 tonnes, which he said was 15 percent down from last year because the harvest in some key areas was not yet at full speed.
“Based on historical activity, at this point of time the crop is somewhat undersold,” a foreign trader said on the sidelines of an international coffee
conference in Ho Chi Minh City.
“At least 300,000 tonnes have been sold so far but the amount of unsold beans could easily reach 600,000 tonnes,” he said.
Vietnam’s coffee harvest started in October and ends in January, to be followed by production for the next 2010/2011 crop year, including watering and feeding trees with fertiliser. The current 2009/2010 crop year ends next September.
Nine traders surveyed by Reuters at the coffee conference said current stocks were low, especially in exporters’ warehouses, and that Vietnam appeared to be waiting for London robusta futures to rise.
Coffee, sugar and U.S. cocoa edged lower on Tuesday as commodity futures took a hit from the strong dollar.
Dealers in Vietnam said on Tuesday there could be delays to shipments as exporters and farmers held back supplies to wait for gains in London futures.
“Some shippers have postponed their delivery due early this month to late December,” said a trader among the nine polled on Wednesday. He did not know the volume of delayed shipments.
Traders’ estimates of the current stock level — 500,000 to 600,000 tonnes — included beans in warehouses and cherries being dried in the Central Highlands coffee belt.
Another trader in Ho Chi Minh City, Vietnam’s largest coffee trading market, said up to 45 percent of the unsold coffee was held by farmers.
However, traders said sales were expected to pick up because operators needed cash for year-end expenses.
“Vietnam will be selling in coming weeks. The question is: at what price?” said a second trader in the city.
Coffee farmers, many of them Christians, need cash for Christmas, and Vietnam’s Lunar New Year festival, known as Tet, the country’s most important, follows in February 2010. After Tet, farmers will need fertiliser and fuel for watering trees.