Vietnam's domestic coffee prices edged lower this week, tracking weakness in global financial markets on worries about policy tightening by the U.S. Federal Reserve, while favourable crop outlook in Brazil dented sentiment further.

Farmers in the Central Highlands, Vietnam's largest coffee-growing area, sold coffee COFVN-DAK at 40,500-41,500 dong ($1.77-$1.81) per kg, down from a range of 41,100 to 42,000 dong a week earlier.

"Output from Brazil, where a harvest is expected to begin in June, is forecast to be huge, putting downward pressure on global prices," a trader based in Ho Chi Minh City said, adding that a harvest is also underway in Indonesia.

However, local traders said low stockpile will keep domestic prices from falling significantly further, adding that farmers in the Central Highlands have sold 70%-80% of their beans.

Traders in Vietnam offered 5% black and broken-grade 2 robusta COFVN-G25-SAI at a discount range of $240 to $250 per tonne to the July contract, unchanged from last week.

July robusta coffee LRCc2 settled down $20, or 0.9%, at $2,090 a tonne after slumping to a three-week low of $2,071 on Wednesday.

In Indonesia's Lampung province, robusta beans for shipments in May and onwards were offered at discounts of $150, compared with the $150-$160 discount last week.

Another trader said the discount was at $200 to the July contract, compared with last week's $200 discount to May contract.

Traders in Indonesia said a mini harvest has begun there, starting at farms in the western region of Lampung.