Coffee output may reach record, lifting exports

Coffee production in India — the third-largest grower in Asia — may reach a record next year, with widespread rains in the main growing regions aiding crop prospects, increasing shipments to buyers in Europe.

Output may total 3,00,000 to 3,05,000 tonnes in the year starting October 1, up from 2,89,600 tonnes, Ramesh Rajah, president of the Coffee Exporters Association of India, said. The harvest may include 2,10,000 tonnes of robusta, used in instant coffee, compared to 1,95,000 tonnes this year, he said.

Record production in India — which exports nearly two-thirds of its output — may cool a 21 per cent rally in robusta coffee prices in London, amid a decline in the global inventory of arabica variety. Arabica coffee had the biggest weekly gain since 2006 last week amid tight supplies and quality problems with the crop in Brazil, the world’s largest grower.

“India will have a lot more coffee to export next season and I suspect it’s going to be difficult for robusta prices to sustain,” said Rajah.

He added that robusta coffee for immediate delivery in London was trading at a discount to the futures market.

Commerzbank AG echoed Rajah’s view in a report last week. Arabica prices may drop to $1.45 a pound by the end of the year and those of robusta to $1,450 a tonne after the “excessive increase” since the end of May, the bank said.

Robusta for September delivery advanced $20, or 1.3 per cent, to $1,571 a tonne on the Liffe Exchange on June 18. Arabica-coffee for September delivery climbed 2.7 per cent to $1.621 a pound in New York, taking last week’s gain to 11 per cent, the most since January 6, 2006.