Sales may total 414,750 metric tonnes before the week-long break that starts on January 21 from a crop likely to reach 1.26 million metric tonnes, according to the median estimate of six traders, exporters and officials in a Bloomberg survey. The harvest is at least 90 percent complete and may finish before the holiday, according to the survey.

The withholding of the beans used to make instant drinks may help boost prices that tumbled 14 percent last year on speculation that a record crop in Vietnam will increase supply. Vietnam's production will rise to 20.6 million, 60 kilogram bags in the 12 months to September 30 from 18.75 million a year earlier, a unit of the US Department of Agriculture said on December 13.

"Farmers aren't selling as much coffee before Tet as they did," said Mai Ky Van, head of the export and business division at Dak Lak province-based October Coffee, Cocoa Co. "I would expect only about a third of the crop to be sold by Tet, while it was about half at the same time last year."

Futures for March delivery dropped 2.8 percent to $1,832 per tonne on NYSE Liffe on January 13. Vietnamese prices fell to 36,000 dong ($1.71) per kilogram on January 9, the lowest level in a year, according to data from the Dak Lak Trade & Tourism centre compiled by Bloomberg.

'Holding the Beans'

Sales are "slower than at the same time last crop year, since farmers are holding the beans on expectation of some increases in prices," said Nguyen Xuan Thai, director at Thang Loi Coffee Co., Vietnam's largest grower.

Profits from high prices in the first half of 2011, when futures gained 19 percent, have left many farmers with enough cash to conserve inventories. Traditionally farmers would accelerate sales in the weeks before Tet to raise funds for the holiday period.

Bean size in the latest crop may be larger than the previous harvest as a result of good growing conditions during the summer, while quality may also be better. Prolonged rains during the picking and drying period last year led to a higher proportion of low-quality, black beans.

"Quality is better this crop since the bean size is bigger than in the last crop," according to Cao Van Tu, director of Dak Lak-based Ea Pok Coffee Co. "It still depends on the drying conditions to make sure the beans are all good at the end."

Bloomberg - january 17, 2012