Coffee exports may decline 15%

Coffee exports from India, Asia’s third-biggest grower, may decline 15 per cent this year, as inventories fall and the European credit crisis curbs demand, an exporters’ group said on Monday.

Shipments will drop from a record 346,850 tonnes in 2011, Ramesh Rajah, president, Coffee Exporters Association, said by phone from Bangalore. Domestic stockpiles have fallen after exporters boosted shipments in December to benefit from a decline in the rupee, he said.

Lower exports from the country may help stem a decline in robusta coffee futures in London, which have slumped 32 per cent since reaching a three-year high of $2,672 a tonne on March 18. Weak demand and higher global supplies may spur a sharper decline in arabica futures, which lost 5.7 per cent in 2011.

“The economic conditions in Europe are not looking good,” Rajah said. “Italy, which is our largest buyer, is having problems. Greece, another major buyer, is also in trouble.”

Economies in the euro region will contract 0.2 per cent in 2012 from 1.6 per cent growth last year, according to the median of 21 economist estimates compiled by Bloomberg.

India exports around 70 per cent of its total coffee output mainly to Europe.