Robusta futures narrowed further their discount against arabica ones, amid concerns of a squeeze on Vietnam’s supplies which have driven local prices to a four-year high.

London robusta futures for September on Friday stood at 2,245 per tonne in morning deals on Friday, up by 1.4% for the session and by 10.6% for the month.

By contrast, New York arabica futures for September eased marginally to 214.60 cents a pound, now down 1.2% for the month.

The arabica premium over robusta futures, the so-called arabusta spread, fell back to the equivalent of 112.77 cents a pound. The spread has now narrowed by more than 10% this month, September basis.

‘Strong demand’

Robusta’s outperformance is being spurred by enhanced demand for what is the cheaper of the two coffee types at a time of relatively high prices of both.

Cecafe, the Brazilian coffee exporters’ industry group, earlier this month flagged strong domestic demand as behind a slump of 65% year on year in the country’s robusta coffee shipments last month, to the lowest July total in five years

“Brazilian manufacturers of roasted and ground coffee and soluble coffee have maintained strong demand for [robusta] in their blends,” Cecafe said.

‘Trouble obtaining beans’

Meanwhile, just as robusta supplies from Brazil, the second-biggest exporter of the variety, have proved limited, those from top-ranked Vietnam have been crimped too – run down by a rapid export programme earlier in the year.

Vietnam’s coffee exports last month of 113,852 tonnes fell unexpectedly behind the July 2021 total, by 7.1% – the first year-on-year drop for any month of 2022, customs data show.

“Due to a short of domestic supplies, traders are having trouble obtaining enough beans to fulfil their export contracts,” Vietnam-based merchant Simexco Daklak said.

Vietnam’s coffee farmers “have practically sold out of their beans”, meaning there had been “few” recent deals, and supporting price prospects, the group said.

“Regardless of international prices, it is not expected that [local] prices will ease until the improvement of domestic supply in November or December, when the next harvest in Vietnam starts.”

Four-year high

Indeed, Vietnamese robusta prices – as measured by values obtained by growers in the in the Central Highlands, the country’s largest coffee-producing area – reached 46,800-48,500 dong ($2.00-$2.07) per kilogramme, Reuters reported on Thursday.

That would was up from 45,000-47,300 dong the week before, and the highest price at the middle of the range since March 2017.

Meanwhile, in Brazil, robusta prices as of Thursday stood at R$737.71 per bag, a three-month high, and up by 3.1% so far for August, according to research institute Cepea.

With arabica values down by 2.0% so far for this month, the arabusta spread has narrowed in Brazil too – to R$536.56 per bag, shrinking by 8.4% for August.