Domestic coffee prices in Vietnam, the world's largest robusta producer, fell to the lowest in more than 10 months on ample supplies, with the harvest expected to end this month, a little earlier than usual, traders said on Tuesday. Robusta dropped to 36,800 to 37,400 dong ($1.77 to $1.79) per kg in Buon Ma Thuot, capital of the key producing province of Daklak, from 37,300 to 38,100 dong a week ago, having broken the 37,000 dong-level held since early November.

"Farmers tend to hold back coffee as prices are down," a trader in Buon Ma Thuot said by telephone. "They are in no hurry to sell now and can wait to sell when prices are better." In London March robusta coffee futures closed down $31, or 1.7 percent, at $1,841 a tonne on Monday, with January's premiums to March expected to widen further, reflecting low certified stocks.

Coffee farmers in Daklak, Vietnam's largest growing province, say they would be happy to sell stocks if prices were around 40,000 dong per kg, a price last seen in early November, before the harvest entered its peak. Previously the beans, widely used for making instant coffee, stood at 36,500 dong per kg in the week ending February 12 in Daklak, Reuters data shows.

Exportable robusta grade 2, 5 percent black and broken was quoted at discounts of $20 to $25 a tonne to London's March contract on Monday before the market closed, while on Tuesday exporters sought prices on par with March. A few bids were around at $25 to $30 a tonne to March, traders said, while last week discounts were offered at $10 to $30 to March.

Copyright Reuters, 2012