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Coffee exports turn sluggish in the second half of the year

The global arabica futures prices fell to a 13-year low and robusta futures to a nine-year low during May this year.

, ET Bureau|
Sep 21, 2019, 05.32 PM IST
KOCHI: Supply crunch, uncertain crop prospects and competitive prices are forcing Indian coffee exporters to go slow on shipments in the second half of the year.

According to Coffee Board data, coffee exports from the beginning of January to September 18 at 276573 tonnes show a marginal increase which the exporters attribute to higher shipments in the first few months.

“The decline started after June with thinning arrivals. The trend may continue for the next few months till the new harvest happens by December,’’ said Ramesh Rajah, president of Coffee Exporters Association.

Any disruption in supply could affect export prospects of the country because of increasing competition from countries such as Vietnam, the second largest coffee producer, he said. Glut and lower prices had led to a 10% fall in Indian coffee exports in 2018.

“In the last two months, arrivals have dwindled. The growers could be holding back, expecting a higher price,’’ said MP Devaiah, general manager at Allanasons, an exporter.

India’s exports mostly comprise robusta beans which command a premium in the global market because of superior quality. “But if we consistently fail in meeting export commitments, then top buyers like Italy may shift to other sources like Vietnam which is selling at a cheaper rate than us,’’ Rajah said. As the extent of damage from heavy rains on the next crop is yet to be assessed, exporters are hesitant to enter new contracts.

Though Coffee Board had estimated a total output of 319500 tonnes in 2018-19, growers reckon production could be closer to 3 lakh tonnes with robusta showing heavier fall than arabica variety.

The global arabica futures prices fell to a 13-year low and robusta futures to a nine-year low during May this year on reports of a good crop in Brazil, the largest producer and Vietnam. After a rally, the prices have started showing a declining trend again.

Though there is not much difference in the global and Indian arabica prices, the Indian robusta prices are around 50% higher than the international rates at present which could affect the competitiveness of exports.

Meanwhile, continuing heavy rains in the main coffee growing of Karnataka, the largest producer of the beverage, is expected to dent the production for next year. “We can assess the damage only when the rains stop,’’ said Anil Bhandari, a grower.

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