Global Coffee Supplies Increase support Prices

Global coffee supplies increase support coffee prices after Vietnam seek higher prices after faster in harvest. Curbs on sales from Vietnam may support prices as global supplies increase. Farmers worldwide will gather 56 million 60- kilogram bags of robusta in the 2012-2013 year, up from 53.3 million bags a year earlier, the International Coffee Organization estimates. Robusta has tumbled 13 percent since the end of September when harvesting began in Vietnam.

Robusta is harvested mainly in Asia and parts of Africa, while arabica is grown in Latin America. Robusta for delivery in January rose 0.8 percent to $1,888 yesterday on NYSE Liffe, while arabica for March increased 1.7 percent to $1.495 a pound on ICE Futures U.S. in New York. Robusta’s discount to arabica has shrunk to 63.86 cents from 145 cents at end-2011.

Farmers have gathered about 75 percent of the crop, or about 1.1 million metric tons, and sold 360,000 tons, according to the medians of seven trader and shipper estimates compiled by Bloomberg. The harvest is set to drop 12 percent to 1.45 million tons from a record 1.65 million tons last season, the survey shows. Robusta traded in London may climb 14 percent to $2,150 a ton by the end of June, a separate survey shows.

Farmers have the financial resources to limit sales and are waiting for domestic prices to reach 40,000 dong ($1.92) a kilogram, Luong Van Tu, chairman of Vietnam Coffee & Cocoa Association, said in a Dec. 6 interview in Ho Chi Minh City. Prices are around 38,000 dong to 39,000 dong and sometimes lower, he said. Farmers have been able to borrow at least 50 million dong each without collateral since the start of the year because of government support, he said.