Trading houses and roasters snapped up robustas from Vietnam and Indonesia this week as premiums softened and farmers unloaded more beans, dealers said on Thursday.
Vietnam's robusta grade 2, 5 percent black and broken beans stood at premiums of between $70 and $80 to London's September contract, down from $100 to $130 last week, their strongest in two years.
London robusta ended 1.8 percent lower at $1,896 a tonne on Wednesday, its biggest one-day loss in over a month, as worries about frost damage to Brazil's coffee crop subsided. The contract rallied to a 2-month high at $1,999 last week.
Rising supply from rival Indonesia also prompted farmers in Vietnam to release stocks, taking advantage of demand from foreign trading houses. Indonesia and Vietnam together account for nearly a quarter of the world's coffee output.
"I've bought beans at $75 premiums. Vietnam doesn't want to hold much stock anymore and supply is on the rise in Indonesia," said a dealer in Singapore.
"Indonesian beans have been traded at $70 premiums. Farmers need to raise cash ahead of Eid al-Fitr."
Dealers saw buying interest from local roasters and processed food producers, such as PT Mayora Indah, and the world's biggest food company Nestle SA.
Indonesian farmers are bringing more beans to trading houses in the main growing island of Sumatra as the weather improves during the current harvest. They also need extra cash to celebrate Eid al-Fitr in early August, which marks the end of the Muslim fasting month of Ramadan.
Daily arrivals were steady from last week at 2,500 to 3,000 tonnes. Indonesia, the world's second-largest robusta producer after Vietnam, is also home to the largest number of Muslims in the world.
Sumatran grade 4, 80 defect beans were offered at premiums of $70 to $100 a tonne to London's September contract, little changed from last week's $80 to $100, but down from $200 two weeks ago, the highest since 2012.
Robusta is either blended with higher-quality arabica beans for a lower-cost brewed coffee or processed into instant coffee.
"Offers from local suppliers are at $80 premiums FOB. I am sure there are also deals at $70, but the quantity may be small," a dealer in Sumatra said.
Week Ahead
Asian robustas premiums will be under pressure next week because of rising supply, but a sharp drop in London could also force dealers to push up the differentials to offset losses.
Premiums and futures usually move in opposite directions.
