Coffee prices in Vietnam and Indonesia dropped this week following a tumble in London prices, traders said on Thursday. The London ICE July contract had shed 11.3 percent over the past week as of Wednesday's close, hitting a seven-and-a-half-month low on Tuesday as funds liquidate longs.

The 5-percent black and broken grade 2 robusta in Vietnam, the world's largest grower of robusta beans, was quoted at a premium of $40-$50 per tonne to London's ICE July contract, compared with discounts of $25-$35 last week. Coffee was traded at 43,000 dong ($1.89) per kg in the main growing province of Daklak, easing from 46,500 dong-47,7000 dong last Thursday.

"Farmers are holding onto beans as prices are too low. They don't want to sell," said a Ho Chi Minh-based trader. Vietnam exported an estimated 138,000 tonnes (2.8 million 60-kg bags) of coffee in April, down 17.9 percent from a month earlier, the farm ministry said on Wednesday. That was slightly above market expectations.

In Indonesia, discounts narrowed this week due to a drop in London prices and higher supply on harvest, traders said. Robusta grade 4 defect 80 in Lampung, Sumatra, was traded at a $40-$50 per tonne discount to London's ICE July contract on Thursday, traders said, compared with a $40-$60 discount a week ago.

Copyright Reuters, 2017