Discounts widen in key coffee markets, weather supportive for Vietnam crop

A worker shows coffee green beans at coffee company Simexco Dak Lak Limited in the town of Di An in Binh Duong province, Vietnam July 8, 2019. Picture taken July 8, 2019. REUTERS/Yen Duong/Files

(Reuters) - Higher coffee prices worldwide prompted wider discounts for Asia's main robusta markets, while weak demand and low inventories at the end of the harvest season in Vietnam and Indonesia also weighed.

Farmers in the Central Highlands, Vietnam's largest coffee-growing area, sold coffee at 39,500-41,000 dong ($1.74-$1.80) per kg, slightly changed from last week's 40,200-41,000 dong range.

London prices settled up $19 or 1% at $2,082 on Wednesday.

"Trade has almost come to a halt ahead the upcoming harvest season next month," said a trader based in the coffee belt.

"Typhoon season is coming. It's been raining recently in the Central Highlands, but rains at this time are actually good for the trees," the trader added.

Traders in Vietnam offered 5% black and broken grade 2 robusta at discounts of $270-$280 per tonne to the November contract, expanding from $250 discount a week ago.

Vietnam's coffee exports in August were down 8.7% from July at 111,697 tonnes. For the first eight months of 2021, Vietnam exported 1.1 million tonnes of coffee, down 6.4% from a year earlier, Vietnam customs data showed.

Sumatran robusta beans were offered at discounts of $280-$300 to the October and November contracts, widening from $250 discount last week following the increase in London benchmark price, a trader in Indonesia's Lampung province said.

Another trader offered $200 discount to the January contract, unchanged from last week.

"Coffee stock is starting to come down since harvest is ending," the trader said.