A drop in Indonesia’s coffee production combined with a plan by Vietnam, the world’s top robusta coffee producer, to increase coffee stocks could offer support to London’s robusta prices.
London’s November robusta closed up US$6 (RM19) at US$1,597 per tonne yesterday, a day after it recorded the biggest single-day percentage drop since March 2008.
The contract has gained nearly 20 per cent so far this year.
Vietnam may stock more coffee, storing up to 500,000 tonnes, equivalent to around half of a 2010/2011 harvest that could be delayed by more than a month to December, a top industry official said yesterday.
Unseasonably heavy rains have pushed back the coffee harvest to July from May while wet weather makes it harder for farmers to dry the beans, resulting in black and hollow beans.
Indonesia, which is the world’s No. 2 robusta producer after Vietnam, may produce 500,000 tonnes of coffee beans this year, down from an estimated 550,000 tonnes in 2009, said Rachim Kartabrata, secretary general of the Indonesian Coffee Exporters Association.
“We have very small carry-over stocks from last year as exporters had sold most of their beans. This is evident from the fall in exports,” Kartabrata said.
Robusta coffee exports from Sumatra island, Indonesia’s main source of coffee, fell nearly 42 per cent in January-July period to 111,541.36 tonnes because of the delayed harvest and low carryover stocks.
Indonesia exported an estimated 494,356 tonnes of beans in 2009, up 13 per cent from 2008 when it exported 437,000 tonnes. The increase was partly due to higher carryover stocks from 2008. Exports this year may be lower than last year because of an expected fall in production, Kartabrata said.
Robusta, a more bitter-tasting variety used in instant coffee, accounts for about 85 per cent of Indonesia’s coffee production. The rest is higher value, aromatic arabica coffee.
Robusta mostly grows in Lampung, Bengkulu, and South Sumatra provinces at the southern end of Sumatra island, while arabica coffee is cultivated in the northern part of Sumatra. — Reuters
