Jakarta, Sept 14 - Prices of Indonesia's coffee rose in line with gains in coffee futures, while farmers released stocks to get cash for the Muslim fasting month and take advantage of a price rebound.
Prices of robusta, used to produce instant coffee, were quoted at 15,750-16,000 rupiah ($1.68-$1.70) a kilogram this week, up from 14,500-15,000 rupiah a kilo two weeks ago.
The benchmark November contract in London robusta coffee futures closed down $23 at $1,881 per tonne on Thursday. But the contract was higher than $1,714 per tonne two weeks ago.
"Coffee futures have risen in the past weeks which has helped local prices rebound," said a dealer in Bandar Lampung, the provincial capital of Lampung province on Sumatra island.
Daily coffee bean arrivals from plantations to Panjang port in Lampung surged to around 1,200 tonnes this week, from 500-700 tonnes a day two weeks ago.
"Farmers and merchants started to release their stocks after holding it for weeks when prices were down," said another dealer in Lampung.
"We will see more coffee beans coming in the next few weeks as farmers need cash for the fasting month and ahead of Eid al-Fitr," the second dealer said.
Indonesia, the world's most populous Muslim country, started the fasting month of Ramadan on Thursday. It will run to the middle of October, which will be marked with the Eid al-Fitr holidays.
Indonesian robusta grade 4, maximum 80 defects, for shipment in January was offered by local exporters at a variety discount of $60-$100 a tonne under the January London robusta coffee futures contract.
The main crop harvest in southern Sumatra is still going on, with some 30 percent of plantations harvested, but dealers said supplies were plentiful as farmers still had stocks.
"Farmers will hold their stocks again after Eid al-Fitr. They will release the beans again at the end of the year ahead of the new school term," the second dealer said.
The main crop harvest in Sumatra normally runs from March to October. Lampung, South Sumatra and Bengkulu account for three-quarters of Indonesia's coffee bean output.
Dealers said a huge earthquake which struck western Sumatra on Wednesday had not hurt supplies, although Bengkulu was hardest hit.
"The quake didn't affect coffee trees in remote areas. Besides, coffee beans from Bengkulu are mostly shipped for roasters in North Sumatra, not for export," the first dealer said.
Coffee supply from Lampung was also unaffected by the quake as the tremors were not big enough to damage plantations or roads, dealers said.
Sumatra's coffee bean exports fell 47.72 percent to 88,071.06 tonnes in January-August 2007, from 168,459.56 tonnes in the same period in 2006, as erratic weather cut output.
Indonesia is the world's second-largest producer of robusta after Vietnam, with robusta accounting for 85 percent of the country's output, forecast at 300,000 tonnes this year. The rest is the more expensive aromatic arabica coffee.