COFFEE/PHYSICALS (UPDATE 1)
* Sumatran at $50 discount vs March, $70 vs May
* Vietnam beans at $150 discount vs May
* Robusta forecast at $2,350/T by end-2011- Poll (Adds technicals)
By Lewa Pardomuan
SINGAPORE, Jan 28 (Reuters) - Fresh coffee beans from an early crop in Indonesia were offered at a small discount to London futures and snapped up by local roasters, while talk of delivery delays resurfaced in Vietnam ahead of a major holiday, dealers said on Friday.
Physical trading began to slow down in Vietnam ahead of Tet, the country's biggest festival, which marks the lunar new year. Beans from the recently concluded harvest saw a discount wider than $100, but there were hardly any offers.
"I guess people are just performing the contracts, delivering coffee, getting the payment and then celebrating the Tet," said a dealer in Ho Chi Minh.
"There are some delays in shipments because of a few reasons. The Tet is coming, so some workers have gone back home earlier. There are a bit of delays, but it's not bad."
Vietnam's robusta beans grade 2, 5 black and broken was offered at a discount of $150 a tonne to London's May contract , steady from last week.
Vietnam, the world's largest robusta producer, ended its harvest late last month, two weeks earlier than usual. Farmers will need cash for fertiliser and fuel for watering trees from February to early May when the rainy season returns.
Talk of delays in Vietnam also resurfaced in Indonesia, the world's second-largest robusta producer, but it barely affected trading in the main growing island of Sumatra, where adverse weather had caused a shift in the harvesting season.
The International Coffee Organization (ICO) has revised down Indonesia's output to 9.5 million 60-kg bags in the crop year to September 2011 from an earlier estimate of 10.75 million bags.
The ICO pegged Indonesia's production in the previous season at 11.4 million.
"Some exporters start to offer new beans but quality has yet to improve because of persistent rains from late last year to now. There are many black beans," said a dealer in Bandar Lampung, provincial capital of Lampung on Sumatra island.
"People are rushing to get the new crop, but many exporters are selling coffee to roasters in Java, which are short of beans. Also, they can get the cash quickly if they sell the beans to roasters."
Harvests in Sumatra usually start in March or April, but farmers have been picking cherries this month as the flowering season began earlier in some areas after the previous crop ended in August last year.
Indonesian export-grade 4, 80 defect beans, were offered at a discount of $50 to London's March contract , steady from last week. The beans were quoted at a bigger discount of $70 under May contract.
Liffe March robusta coffee finished down $6 at $2,090 per tonne on Thursday after trading in a tight range.
Second month London coffee is expected to retrace to $1,813 over the next four weeks, as a five-wave cycle has completed at $2,185, and the RSI indicator formed bearish divergence on daily chart, according to Wang Tao, who is a Reuters market analyst for commodities and energy technicals.
For a graphic, click:
http://graphics.thomsonreuters.com/WT/20112801154410.jpg
Arabica coffee futures will rise by 12.3 percent to their highest in more than 14 years by the end of 2011 on sharply shrinking supply, while an increase in consumption will also lift prices of robusta, a Reuters poll showed.
WEEK AHEAD
Looking ahead, offers from Vietnam were expected to slow to a trickle next week before the Tet celebration, while more beans from Sumatra would enter the physical market, although rains could also affect quality.
"The fly crop has started in some areas and it seems that the quantity is quite big. So, people think that there won't be many beans left during the main crop," said the dealer in Bandar Lampung.
Robusta mostly grows in Lampung, Bengkulu, and South Sumatra provinces at the southern end of Sumatra, while arabica coffee is cultivated in the northern part of Sumatra.
Combining arabica and robusta, Indonesia is the world's third-largest coffee producer after Brazil and Vietnam.
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