Coffee prices decline on good crop prospects in Brazil

Farm gate prices in the growing regions of Karnataka have shown a decline of 20 per cent in the last two months

Indian coffee growers are worried at bean prices dropping in the past few weeks, after news broke that Brazil would harvest a better-than-expected crop in 2015-16. Arabica prices have declined as much as 30 per cent.

Currently, Arabica bean prices are ruling at 125 cents a pound (lb) compared to 180 cents a lb in October 2014. The ICO (International Coffee Organization) composite Indicator price stood at 127.97 cents a lb in the last trading session on March 12 — the lowest price in the current month.

LIFFE Robusta coffee futures extended losses to a 13-month low on March 12, on fund and technical selling. LIFFE May Robusta coffee futures closed down $52, or 2.9 per cent, at $1,768 a tonne, after touching $1,756 — the lowest level since February 2014 — said the Coffee Board.

“The long dry weather in Brazil last year had led to a belief the country would harvest less crop in 2015-16. However, good rains in January and February in that country has now changed the outlook and it is expected to harvest a better crop than expected. This resulted in price fall everywhere,” Ramesh Rajah, president, Coffee Exporters’ Association, told Business Standard.

The news of improved weather in Brazil added to the selling pressure. Farm gate prices in Karnataka, which contributes 70 per cent of India’s coffee output, have crashed 20-22 per cent since early January.