Coffee exports rise 17% in 2017, may not be as good in 2018

Coffee exports from India (January to December) rose by around 17 per cent in quantity to $958.80 million and eight per cent in quantity terms to 0.38 million tonnes. Re-exports saw a drop in 2017. In India, the domestic coffee's content in the instant coffee almost doubled in 2017. Exporters have said 2018 may not be as good as 2017 due to price and projected a drop in the crop.

According to Coffee Board's data total exports rose to $958.80 million in 2017 from $818.65 million in 2016. Re-exports, however, dropped to 64,888 MT in 2017 from 79,034 MT in 2016.

India is Asia's third-largest producer and exporter of coffee. The major markets include Italy, Germany, and Russia. India ships both Robusta and Arabica varieties, besides instant coffee.

Of the total exports, India exported 77,770 tonnes to Italy, 41,064 tonnes to Germany and 29,531 tonnes to Russia during the year.

Ramesh Rajah, President, Coffee Exporters Association said that the increase in coffee exports was mainly due to Robusta export, which sees a major jump. Production was also good during the year for Robusta.

As the crop was higher, which lead the exporters to reduce the prices to $100 premium, over the London terminal, from $300 premium. A combination of price reduction and good quality of coffee are the key reasons for the increase in volume, said Rajah.

This led to increasing the Indian Coffee content in instant coffee to 50,370.32 MT in 2017 from 25,272.100 MT in 2016.

On the outlook, he is not very optimistic about 2018 as the growers are expecting Robusta production to drop by around 20 per cent as against Coffee Board's projection of 13.96 per cent (30,300 MT) growth in Robusta production.

In value terms exports in 2018 is expected to drop by around 15-20 per cent, according to Rajah, who adds domestic coffee's contribution in instant coffee export will also come down. In Arabica, there would not be much change in volume terms.

Rajah says, planters and exporters are going to face the pressure of price in 2018 due to excess production in other countries, while India going to see a drop. These two will hit the margins.

According to Rabobank Agri since the end of September, coffee prices were very stable-until December, when the March 2018 contract dove from USc 129/lb to USc 120/lb.

The coffee market is going into what is likely to be the second of two back-to-back years of surplus production, according to the International Coffee Organisation. As the arrival will increase, this is expected to bring the prices down.