Stock Analysis, IPO, Mutual Funds, Bonds & More

Drop in global Arabica prices stymie India’s exports

Bumper crop in Brazil and Vietnam also seen weighing on exports.

, ET Bureau|
Dec 12, 2018, 11.30 AM IST
Getty Images
Arabica production in the country was around 95,000 tonnes last year as estimated by the Coffee Board.
KOCHI: India’s coffee exports are likely to remain sluggish in the last quarter of the fiscal year, thanks to low prices and an expected slump in the Arabica crop.

Shipments since the fiscal year started on April 1 to December 10 showed a 13 per cent fall at 2,32,080 tonnes as per Coffee Board data. In 2017-18, the country had posted a 12 per cent increase in exports.

Global prices continue to remain at a low level. Global Arabica futures prices had slumped to a 12-year low in September to 97 cents per pound before recovering. The December futures prices are marginally above at $1 (Rs 71.92) per pound now.

“Exports have been poor this year and shipments for the next few months will depend on whether the growers will sell at a lower price,” said Ramesh Rajah, president of the Coffee Exporters Association. Exporters had predicted a 10-15 per cent drop in shipments in the current year. India exports about 70 per cent of its coffee production, which touched 3.16 lakh tonnes in 2017-18.

Prices of Indian Arabica parchment are hovering around Rs 7,000 per 50 kg. “This is below the cost of production for the growers, which is pegged around Rs 8,000,” he said.

Global prices are likely to remain subdued as Brazil, the largest coffee producer, is expecting a bumper crop in 2019. This year, its crop is said to be close to 60 million bags (each of 60 kg). Production in Vietnam, the next biggest producer, is also predicted to be a good one.

Meanwhile, the Arabica coffee harvest in India has started and growers expect a lower crop. “Heavy rains this year in Coorg, and parts of Chikmagalur have hit production,” said HT Pramod, former chairman of the Karnataka Planters’ Association.

Arabica production in the country was around 95,000 tonnes last year as estimated by the Coffee Board. Growers fear it could be down by around 15,000 tonnes this time. However, unlike last year, the Robusta crop may not suffer much damage.

Almost two-thirds of the coffee production in the country is Robusta, which stood at 2.21 lakh tonnes last year. “Robusta production may be normal,” Pramod said. Growers are also worried that prices of pepper, grown as an inter-crop in coffee estates which provides an alternative income, have crashed this year.

Add Your Comments
Commenting feature is disabled in your country/region.

Other useful Links

Copyright © 2020 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service