* Discounts narrow to $35/T to $50/T to London's May
* January exports down 36 pct y/y at 143,000 T
* Farmers have sold 30 pct to 40 pct of harvest
By Ho Binh Minh
HANOI, Feb 18 (Reuters) - Vietnamese coffee farmers were selling beans on domestic markets to exporters as prices firmed in line with global trends, but foreign buying demand remained thin, traders said on Tuesday.
Farmers in Vietnam, the world's largest robusta producer, have begun watering trees this month after ending the 2013/2014 crop harvest in December, and many need cash for fuel for their water pumps. The watering process runs until early May.
"Domestic prices are firm, while buying demand is slow," a trader in Ho Chi Minh City said. "If anyone needs to cover their position, they can just raise the buying price a bit and so they get the beans."
Another trader said some farmers who missed a rally early this month were willing to sell, but they were not rushing, waiting for prices to rise again.
In early February prices in Vietnam tracked a global hike and rose to 36,900 dong per kg, the highest since Sept. 26, 2013 when robustas stood at 37,100 dong/kg, Reuters data shows.
The Liffe May robusta contract
Vietnamese robusta rose to 35,400-35,600 dong ($1.68-$1.69) per kg on Tuesday in Daklak, the country's biggest growing province, from 34,700-34,900 dong a week ago.
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"Looking at the recent price rises, farmers thought there were signs prices could go up again, so they are not selling quickly," said the second trader based in Ho Chi Minh City.
Robusta beans grade 2, 5 percent black and broken were quoted at discounts of $35 to $50 a tonne to the May contract, but several deals were carried out already at a discount of $40 a tonne. Last week the discounts stood at $30 to $60 a tonne.
Vietnamese farmers have sold up to 40 percent of the harvest, deposited another 10 percent in the warehouses of exporters or buying agents, and are keeping half of their 2013/2014 harvest, traders said.
Farmers can deposit beans with exporters or buying agents in advance, and fix the selling price later, often when London futures prices advance for several days in a row.
January's coffee exports fell 36 percent from a year ago to 143,000 tonnes, Vietnam Customs has said.
The January volume brought coffee exports to 420,100 tonnes (7 million bags), in the period from October 2013 to January 2014 - the first four months of the 2013/2014 crop year - a drop of 31.3 percent on the year, government data show.
"Unlike before Tet, warehouses in and around Ho Chi Minh City are now full of coffee," a third trader said.
That means up to 300,000 tonnes of coffee were in stock, ready for loading, traders said.
Vietnam produced an estimated 28 million bags from the 2013/2014 crop, up from a prior estimate of 25 million, a Reuters poll showed.
($1=21,080 dong)
(Editing by Clarence Fernandez)
((ho.minh@thomsonreuters.com)(+844 3825 9623)(Reuters Messaging: ho.minh.thomsonreuters.com@reuters.net))
Keywords: MARKETS VIETNAM/COFFEE
