HANOI, July 4 — Coffee exporters in Vietnam, the world's top robusta producer, should avoid signing contracts now for the next 2009/2010 crop due to current low prices and production uncertainties, an industry official said today.
Vietnam will start its next harvest from late October and industry officials hoped a delay in sales could help arrest a fall in prices to near three-year lows early this week.
Vietnamese robusta prices closely track the London futures markets, where prices recovered slightly due to industry buying in the last two sessions after sharp falls in June. The September contract ended US$4 (RM14) higher at US$1,338 per tonne yesterday.
"Due to unfavourable price changes, businesses should limit sales at present and need to boost the cooperation between each other to protect their benefit," chairman of the Vietnam Coffee and Cocoa Association Luong Van Tu said in a statement.
"We need to act now and coordinate with each other to avoid a volatile market," Tu told Reuters after the coffee association held an urgent meeting yesterday to discuss measures to prevent price falls.
"It is difficult to quantify how much prices could go up after our action," Tu said, blaming speculators for causing recent price falls.
With coffee prices in Vietnam at their lowest in 27 months, export quotations also fell near three-year lows as sellers held back their slimming stocks, traders said on Tuesday.
Tu said exporters executing futures contracts needed to negotiate with buyers over the delivery time due to dwindling domestic supply.
Vietnam's next harvest is forecast to fall to 18.35 million 60kg bags from 19.67 million bags in the previous 2008/2009 crop year, a USDA report on June 12 said.
"Vietnam cannot regulate the market but we also cannot let businesses face losses," he said. Coffee is its second-largest agro-product export item in terms of value, after rice.
Vietnam now has more than 1.67 million bags of coffee left unsold, excluding domestic consumption, Tu said.
But the leftover volume was based on a crop output of 16 million bags estimated by the Vietnam Coffee and Cocoa Association, lower than traders' figures of 19.5 million bags plus 1.8 million bags carried over from the previous season.
Vietnam may still have around 4 million bags left unsold, after government figures showed shipments between October 2008 and June 2009 totalled 16.37 million bags.
At yesterday’s meeting, the coffee association urged the agriculture ministry and the industry and trade ministry to seek government approval for major exporters to get interest-free loans to stockpile coffee in the new crop year.
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