* Export quotations up, tracking London
   * Domestic sales slow due to stockpiling, risks
   
   By Ho Binh Minh
   HANOI, May 11 (Reuters) - Coffee prices in Vietnam are rising in line with international markets, which may prompt robusta buyers to turn to regional rival Indonesia, where the harvest should start soon, traders said on Tuesday.

Vietnamese robusta beans rose to 24,800-25,000 dong ($1.31-$1.32) per kg on Tuesday from 24,000-24,200 dong a week ago, after London's July robusta coffee  ended up $14 at $1,385 per tonne on Monday, underpinned by a weaker dollar.
   Export quotations for robusta grade 2, 5 percent black and broken beans rose to $1,385 a tonne, on par with London's July contract, while last Tuesday quotations were at a discount of $10-$30 to the July contract.  
   "Indonesia has started selling, so with rising prices here, buyers could choose to buy in Indonesia," said a trader at a foreign firm in Ho Chi Minh City.
   Indonesia's main coffee harvest in southern Sumatra normally takes place in March. But this year it has been delayed to later this month or June because prolonged rains delayed the ripening of coffee cherries.
   "It's been quiet on the export market and farmers say they may sell to companies that have been buying for the stockpiling plan," another trader said.
   Last month the government gave the go-ahead for exporters to buy 200,000 tonnes over a three-month period ending July 15 and hold it in stock until Oct. 15 to shore up prices. 
   Traders said warehouses in the Central Highlands coffee belt were full of beans that were of good quality, given the harvest only ended in January.
   Coffee farmers have lost trust in local buying agents after several went bankrupt, partly due to price volatility in London in recent months, and that has contributed to slower domestic trade, the second trader said.
   For a feature on domestic coffee market risks,   State-run lender Agribank has started giving funds to branches in the Central Highlands to enable coffee firms to buy beans under the stockpiling plan, state-run Voice of Vietnam radio said on Tuesday.
   At the current domestic price, the country's largest bank by assets would need $264 million to fund purchases.
   State weather forecasters said scattered showers were expected later this week in the five provinces of the Central Highlands, before the rainy season arrives fully in around a week.
   That means farmers can stop watering, which will reduce their need for cash to buy fuel, traders said.
   "There has been a hot period and farmers have increased watering, but the volume of water is sufficient," the second trader said after a crop survey last week in production areas including Daklak, Vietnam's top coffee-growing province. ($1=18,970 dong) (Editing by Clarence Fernandez)   
Tuesday, 11 May 2010 13:14:00