Indian coffee exports may dip as growers hold on to stocks for better price

Indian coffee exports are facing uncertainty with demand getting sluggish and the growers holding on to the newly harvested crop in anticipation of better prices.

Coffee shipments for the fiscal year 2014-15 have slumped 9% to 2,86,393 tonne. The decline has been as much as 15% for the last quarter ended March 31, 2015. The prices had fallen in the last couple of months with widespread rain in Brazil, reviving hopes of a better crop in the country, which is the largest coffee producer.

“Latest reports suggest that the crop would be less in Brazil, where the harvest will begin in May. If Brazil crop is low, then the world coffee prices will rise,” said Coffee Board chairman Jawaid Akhtar.

The growers are waiting for the prices to recover, which explains the rea son for lower export in the recent months. Vietnam, the second-largest producer of coffee, is also adopting a wait and watch policy.

The slump in prices has affected the Arabica coffee exports the most. The Indian Arabica prices have dropped. 9,500 per 50 kg in the last nearly 8% to ‘couple of months, mirroring the trend in the world market. After the recent reports of a normal crop, the world arabica prices are moving up gradually .The May futures at ICE New York jumped 4% to a six-week high of $1.462 per pound on Monday.

“Indian coffee production is expected to be lower this year. The growers are not willing to sell below the cost of production. Moreover, the reduction in incentives for bulk exports from 5% to 3% will hit the exports in the short run. In the long term, it could impact the growers too,” said Ramesh Rajah, president, Coffee Exporters Association of India.

The Coffee Board estimate of Arabica production is 99,600 tonne. But the Karnataka Planters’ Association says it could be down to 60,000-65,000 tonne because of white stem borer pest attack. “Unlike the last year, there could be a steady increase in coffee prices in the coming months,” said a major grower Anil Kumar Bhandari.

Brazil’s production was around 47-49 million bags (each bag weighs 60 kg) last year.

Suorce: economictimes.indiatimes.com