"In general prices continue to fall," said an international coffee trader. "The Vietnamese, including exporters and ordinary people who keep coffee for speculation, are not willing to sell but the quality of their stocks is dropping."

Traders said Vietnam had started offering the lower grade eight percent black and broken coffee, as better quality grades had mostly been sold since the end of the harvest in January.

Vietnam's robusta five per cent black and broken grade was quoted on Friday at around $1,300 a tonne, FOB Saigon Port, down from $1,320-1,350 last week.One dealer said he had heard that earlier in the week this grade had been quoted at $1,330-1,340 a tonne.

London July ended $9 down at $1,498 a tonne on last Thursday. Vietnamese robusta eight percent black and broken was offered at a discount of $30 a tonne from the 5 per cent black andbroken grade, traders said, adding that it was easier to purchase lower grade beans due to large availability in the market. One Ho Chi Minh City-based trader said differentials between high and low grades this year were higher than in those in 1998 when a discount of around $10 a tonne was offered due to sheer market pressure. The traders said this situation had indicated larger stocks and poorer quality this year in the country. But he added that it was a good time for roasters to buy cheaper raw materials and then lower onward selling prices to boost competitiveness in coffee retail markets. Vietnam, one of the world's top exporters of robusta, which is widely used to produce instant coffee, plans to export 380,000 tonnes of coffee in calendar 1999. According to the official statistics, it is shown that Vietnam exported 102,000 tonnes of coffee in the first quarter this year, although traders said the actual amount could be as high as 200,000 tonnes. Vietnam harvests coffee from October until the end ofDecember or early January.

Interestingly, the current weather conditions were good for coffee growers, said residents in the country's main coffee producing province of Daklak.