Vietnamese coffee prices have lost around 10 percent since the new crop began in October. Exporters quoted discounts to London's March contract at $10-$30 a tonne, smaller than $30-$40 last Tuesday, while buyers sought discount of $50 per tonne. Robusta futures tracked arabica lower on Monday, with the March contract ending down 1.26 percent at $1,880 a tonne.
Since futures and differentials move in opposite directions, a drop in the London market would normally prompt sellers to cut the discounts. Vietnam's robusta grade 2, 5 percent black and broken dipped to $1,830-$1,870 a tonne, free-on board basis, from $1,840-$1,880 last Tuesday. Arabica futures on ICE sank after an exporter in top grower Brazil forecast a huge 2013/14 coffee crop and the move lower triggered automatic sell orders, dealers said.
Only around 20 percent of the 2012/2013 coffee crop in Vietnam has not been picked and farmers are expected to finish the process this month. Reflecting high stocks, the shipment this month would range between 100,000 and 150,000 tonnes, largely in line with November. Tracking the fall in London, Vietnamese robusta beans eased to 37,300-38,100 dong ($1.79-$1.83) per kg on Tuesday in Daklak, the top growing province, from 38,000-38,100 dong a week ago.
The current prices have fallen 10 percent from 42,300 dong per kg at the end of September, when the previous 2011/2012 crop ended with a record output of around 1.7 million tonnes, or 28.3 million 60-kg bags, based on traders' estimates. The International Coffee Organisation, in its first estimate of the 2012/2013 crop, said on Tuesday world output would rise 8.4 percent from the previous season to 146 million bags, with arabica jumping 10.6 percent to 90 million bags.
Vietnam will see the current harvest falling 8.6 percent to 22 million bags, the ICO said in its November report. The ICO estimate of a decline in Vietnam is in line with market expectation, as trees need to rest after a record high crop last year. Traders project output to fall up to 10 percent.