Asian robusta trade came to a standstill on Thursday after benchmark London futures fell almost four percent on the prospect of rising output in top producer Vietnam and a sell-off in arabica, dealers said.
July robustas touched a 3-month low at $1,903 a tonne on Wednesday after New York arabica dropped nearly two percent as harvests ramped up in key producing regions. Arabica often influences robusta futures.
Vietnam's grade 2, 5 percent broken beans had changed hands at $30 to $40 below London futures earlier this week, versus $75 discounts last week. Higher-quality robustas usually purchased by Nestle, the world's biggest food group, were reportedly traded at premiums of $10.
"Exporters in Vietnam will hold back because of the current prices in London. They think prices could rebound if they stop offering beans," said a dealer in Singapore. "I haven't got offers from Indonesia after prices dropped last night."
Vietnam's 2014/15 coffee output is estimated at 29.2 million 60-kg bags, up from about 29 million bags in 2013/14, according to a U.S. Department of Agriculture attache report.
Dealers said Vietnam's output is at record.
Sumatran grade 4, 80 defect beans were traded at premiums of $30 to $50 to London futures before Thursday's drop, having been sold at prices on par with London last week.
The harvest has picked up in Indonesia's main growing island of Sumatra and could peak later this month, or in early June. Daily arrivals from plantations were steady at around 5,000 tonnes.
Indonesia, the world's third-largest coffee producer, mainly grows robusta - a bitter-tasting variety used in instant coffee. Indonesia and Vietnam, which compete in the robusta market, together account for about 27 percent of global coffee output.
"I am trying to get offers but I haven't got anything," said another dealer in Singapore, referring to the sluggish physical market.
The International Coffee Organization pegs Indonesia's coffee output at 11.67 million bags in the 2013/14 crop year, down from 13.04 million in 2012/13.
WEEK AHEAD
Indonesian coffee premiums could widen next week, while Vietnamese beans could trade at smaller discounts if London futures extend losses. Futures and differentials usually move in opposite directions.
