Global food producers such as Nestle SA will have to pay more for the robusta coffee beans used in biscuits and drinks as a supply crunch sends premiums to multi-month highs in Asia, forcing some exporters to cancel shipments. Farmers in Vietnam, the world's No. 1 producer of robusta, are holding back their coffee, frustrated by persistently low London futures prices. In No. 2 producer Indonesia, unusually wet weather during the harvesting season has made it tough for growers to dry beans. The supply squeeze has raised fears of defaults by trading houses in Vietnam and exporters in Indonesia and it may curb exports from the two countries which account for nearly a quarter of the world's coffee output. "Exporters and suppliers are in a difficult position," said Moelyono Soesilo, purchasing and marketing manager at exporting firm Taman Delta Indonesia. "Some have already signed long-term contracts to sell beans at lower differentials. Farmers only sell beans in small quantities to cover daily needs." London September robusta plunged to a 32-month low last week, tracking New York arabica futures which slumped as funds sold in the face of ample supply from Brazil. On Wednesday, September robusta followed New York arabica higher to settle up $32 at $1,795 a tonne. Lower supplies from the two main robusta producers may stem the decline in London, blamed on Brazil. The Latin American state is the world's top coffee grower and mainly produces the aromatic arabica variety used by Starbucks Corp. Robusta is either blended with arabica beans for lower-cost brewed coffee or processed into instant coffee. Indonesian robustas are normally sold below or slightly above London futures during the March-June harvest, but premiums began to rise in April and jumped to $170 in June, their highest since mid-2012. Exporters had signed contracts to ship the beans at $20 above London. 'Deja Vu' Indonesian exporters have cancelled contracts to ship up to 4,000 tonnes of coffee so far in June. Local export groups say the figure may be much higher. "We may experience deja vu, a repeat of what happened in 2011," Moelyono said. Heavy rain damaged the crop in the 2011/12 season, causing a chronic supply shortage that sent premiums to all-time highs of $550. In Vietnam, premiums stood at multi-month highs at $120 a tonne this week, versus discounts of $15 to $35 in early January. Vietnamese beans are normally sold at discounts to futures. "People could get a deal at $90, while below that (the Vietnamese exporters) could not sell," said a trader in Ho Chi Minh City. Dealers in Singapore confirmed deals were done at $90 a tonne for the Vietnamese beans, while Indonesian robustas were sold to domestic and foreign buyers at $170 premiums this week. "What happens in London doesn't really reflect the fundamentals. Beans are at premiums in Indonesia and Vietnam and we just don't know why futures are so low," said a dealer in Jakarta. "The local industry is confused. Shall we look at London, or shall we trade on physical premiums?" (Reuters)