HANOI - All eyes were on Vietnam's coffee market this week as the harvest was peaking and premiums to global prices rose, while supply thinned out in Indonesia, traders said on Thursday.
The harvest in Vietnam, the world's largest robusta producer, has entered its peak period, drawing attention from foreign buyers, who may not secure sufficient beans from rival producer Indonesia.
"Vietnam is under the spotlight. All demands go to Vietnam," said a trader based in the city of Semarang.
Premiums for Vietnam's robusta grade 2, 5 percent black and broken coffee were offered at $30-$50 a ton to the March contract, from $20-$40 a week ago, while bids were at par with the March contract to a premium of $30.
The contract closed up 0.3 percent on Wednesday at $1,526 a ton, but is still down 2.3 percent from a week ago.
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Robusta grade 1, similar to Sumatran coffee, stood at premiums of $80-$100 a ton.
Indonesian robustas are offered higher, at premiums of $140-$150 to the March contract for a ton of Sumatran beans grade 4, 80 defects <COFID-G4-USD>, compared with a premium range of $120-$160 a ton last week.
Exporters expected differentials at up to a premium of $150 a ton, while buyers sought below the premium, leading to no transactions being concluded, a Lampung-based trader said.
Traders said stocks held by growers have dropped to low levels, with some trying to hold back sales while waiting for higher prices.
Indonesia's next harvest starts in April 2016.
Vietnam's 2015/2016 crop output would grow by a modest 1.4 percent to 28.3 million 60-kg bags, following a 6.4 percent decrease in the previous 2014/2015 season, Fitch Ratings' BMI Research said in a report released on Wednesday.
"Coffee supply in Vietnam is currently quite ample as exports have been weak since the start of 2015," the report said, adding that high stocks in the country could keep the global coffee market well-supplied in 2016.
BMI Research's forecast is below that by Volcafe, which said Vietnam could harvest 29.7 million bags, while a U.S. Department of Agriculture attache projected output to rise 7 percent from the previous season to 29.3 million bags.
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In contrast, the Vietnam Coffee and Cocoa Association said the current crop output could fall 10 percent to 18 million bags.
