Coffee at four-week high

With global coffee output remaining at the lowest levels in the recent years, Indian coffee is fetching higher prices in the global markets. Output from major coffee-producing countries, including India and Brazil, has remained low this year, leading to a supply shortage globally. That has triggered price rise, and according to industry sources, prices will remain comfortable for the next 4-5 months.

Indian arabica coffee prices have hit a four-week high in the international markets. According to the Coffee Board data, ICE (New York) arabica coffee futures closed solidly higher, near the session’s high, and hit a four-week high on Monday. December coffee closed up 4.92 per cent up, at $1.33 per pound. Similarly, September coffee closed up 5 per cent, at $1.32 per pound. Liffe (London) robusta coffee futures followed the US market and closed higher on Monday. Liffe September and November prices settled up $17 each at $1,491 per tonne and $1,505 per tonne respectively.

According to a presentation made by the Coffee Board at the inaugural of the 116th annual conference of the United Planters’ Association of Southern India (Upasi) at Coonoor in Tamil Nadu, today, prices of Indian coffee will remain comfortable for the next 4-5 months till the new crop arrives at the market. This year, there was heavy crop losses in the biggest coffee-producing state of Karnataka due to untimely and excessive rains, and the berry-borer menace. Hence, the Coffee Board had to trim its output forecast. It is estimated that in the present year, the total output in the country will stand at 262,300 tonnes, which is 10 per cent lower than the initial (post-blossom) estimates of 293,000 tonnes. Even Brazil’s crop at 39.1 million bags (1 bag is 60 kg) is expected to be about 11 per cent lower than expected.

Speaking to Business Standard, a senior Coffee Board official said that a comfortable price situation will continue in the next few months, at least till June 2010, when Brazil’s new crop comes to the market. Brazil is expecting a bumper crop in 2010. And even India has pegged its output at a higher level at 306,300 tonnes — arabica 101,525 tonnes and robusta 204,755 tonnes, which will arrive in the market in January 2010.

According to Ramesh Raja, president, Coffee Exporters Association of India, prices may remain high only for a short period. A high output in major coffee-producing countries would mean a glut in the market, resulting in a sharp fall in the international markets. “In India, prices may not fall much as there will be a sustained domestic demand.

However, exports will see sharp reduction in their price realisation. So, the next year will be characterised by high volumes and low prices,” Raja noted.

Coffee exports from India are still reeling from the impact of global recession. Coffee exports during the January 1 to September 14, 2009, period stood at 137,276 tonnes, which is 20 per cent lower compared to the corresponding period of the previous year.