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Coffee prices surge on demand

Update: January, 07/2006 - 00:00

Coffee prices surge on demand

(07-01-2006)

Bien Hoa Coffee Factory’s worker controls an instant coffee production line. Material costs have increased on the domestic market mainly due to drought. — VNA/VNS Photo Van Khanh

HA NOI — Robusta coffee bean prices in Viet Nam surged yesterday in local trading in anticipation of rising demand from domestic distributors and exporters faced with significantly reduced supplies this year.

The Viet Nam Coffee and Cacao Association (Vicofa) attributed the price hike to low yields as a result of widespread drought, adding that local growers have almost finished harvesting their 2005-06 crop.

Early last year the average price of wholesale coffee was VND10,000 per kilo, but in the first six days of this year, the price increased from VND16,000 to VND18,000-18,300 per kilo in Lam Dong, Gia Lai and Dac Lac provinces, according to Vicofa.

Export prices also increased to US$1,185 per tonne yesterday at Sai Gon Port, up from $1,130-1,135 per tonne on Wednesday, and $980 per tonne in December.

Coffee plantation owner Tran Huu Linh said his 2005-06 coffee yield was down by nearly 50 per cent over the previous year, and blamed the extended dry spell for the disappointing crop.

Vicofa chairman Doan Trieu Nhan agreed the 2004-05 drought was to blame for the low output this year, and cited statistics revealing an overall yield decline of 30 per cent to 600,000-650,000 tonnes.

Central American coffee-growing countries suffered similar setbacks this year, further contributing to lower supplies on international coffee markets, Nhan said.

Robusta coffee futures for delivery in March 2006 traded at $1,265 per tonne on the London market on Thursday, $37 higher than closing prices at the previous session, according to the Ministry of Trade’s Information Centre. Prices on Tokyo’s commodities exchange market hit 17,310 yen per 100 kilos on Thursday, closing 410 yen higher by the closing bell on Wednesday.

Ngo Tan Giac, owner of Thu Ha Coffee in Pleiku, predicted coffee beans could top VND20,000 per kilo or higher by the time the local harvest is completed. — VNS

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