MARKETS-VIETNAM/COFFEE (UPDATE 2)
* Domestic prices at all-time high
* February actual loading may fall
* Farmers curb sales as they eye further prices rises
(Adds farmers holding back on sales, prices, details)
By Ho Binh Minh
HANOI, Feb 15 (Reuters) - Robusta prices in Vietnam's domestic coffee market jumped to a record of 41.3 million dong ($1,976) a tonne on Tuesday, tracking gains in London futures, prompting some farmers to hold back on sales, traders said.
The rising trend in recent months may slow coffee trade in Vietnam, the world's second-largest producer after Brazil, as more exporters and farmers may continue to wait for further gains.
Farmers' moves to curb sales despite a harvest of 18.43 million bags -- twice the volume of robusta that rival Indonesia could pick based on ICO data -- continue to put global markets on edge, as demand by roasters and funds for robusta, and the price of the beans has been strengthening since late 2010.
In domestic currency terms, prices reached the previous high of 41 million dong per tonne in early March 2008 in the key growing province of Daklak.
But in dollar terms, domestic prices on Tuesday are still below $2,067 a tonne recorded last Thursday , before Vietnam devalued its currency by 8.5 percent on Friday.
Robusta prices in Vietnam, the world's top producer of robusta beans used mainly for making instant coffee, closely tracking London robusta futures market, where prices have been rising in recent weeks on strong buying demand.
Traders said coffee roasters have been switching to the cheaper variety as arabica beans rose to their highs for more than a decade on fund buying and tight supply.
London's May contract ended up $28 at $2,283 a tonne, just below its 2-1/4-year peak of $2,287 from Feb. 3.
"With prices rising like this, farmers do not have to rush to sell and they can sell a little but still get enough cash," a trader in Ho Chi Minh City said.
Coffee prices in Vietnam have so far this year gained 11.3 percent from 31.7 million dong per tonne on Dec. 31, 2010, after surging 56 percent last year.
DISCOUNTS NARROWER
Discounts to London's May contract narrowed to $145-$150 a tonne, from $150 last Tuesday, placing robusta beans grade 2, 5 percent black and broken at around $2,135-$2,140 a tonne, free on board, from $2,070-$2,080 a week ago.
"Some (foreign) companies were buying at the discount of $145 a tonne last night when prices were rising but the most common was $150 a tonne," another trader said.
Vietnam's time is seven hours ahead of GMT.
Overall, trading in Ho Chi Minh City, Vietnam's largest coffee market, and loading at its Saigon Port have been slow after Vietnam reopened all markets last Tuesday following a long holiday to celebrate the Lunar New Year.
Loading by the end of last week stood at more than 20,000 tonnes, far below traders' estimates for February shipment of between 80,000 tonnes and 90,000 tonnes .
The first trader said there were reports that farmers in the Central Highlands coffee belt may have decided not to go ahead with the delivery of coffee beans to exporters despite initial verbal agreements, because of recent price rises, which could lead to more loading delays.
"Some farmers who agreed to sell earlier have now held back because they see the price gap between now and then," he said.
A tonne of coffee stood at as low as 30.2 million dong on Oct. 1, 2010, the start of the 2010/2011 coffee crop year in Vietnam that lasts between October and September.
Coffee farmers can sell directly to exporters or to buying agents, who have increasingly become speculators on the domestic markets in recent years. Defaults by these brokers led many exporters to chase beans hardly early last year.
Domestic procurement could also be difficult at present as Vietnamese farmers are holding low stocks of coffee, a senior industry official said on Monday. ($1=20,900 dong).
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