Coffee prices touch new high, but Indian exporters unable to cash in on it

Coffee prices have trended higher over the past three weeks, with arabica posting a five-month high on Monday and robusta coffee climbing to an eighteen-month high last Friday. Prices of robusta stood at $1,430 per tonne compared with $1,300 last year. This year's low was $1,100. The phenomenal increase in international prices has not reflected in local prices in India due to high stock.

Prices are expected to increase further since the outlook for a smaller coffee crop in Vietnam, the world's largest robusta coffee producer, is boosting robusta prices. Reports quoting CEO of Simexo Dak Lak, Vietnam's second-largest coffee exporter, forecast that Vietnam 2020-21 coffee production will fall by 4.8 per cent to 1.72 MMT, citing lower coffee yields from a drought this year during the coffee tree flowering period in Vietnam's Central Highlands.

The rise in price has been subdued to around 15 per cent, whereas international prices are up 35 per cent, because there is stock in India, said Rohan Colaco, planter from Karnataka and a member of Karnataka Planters Association. It may be noted, Karnataka is the largest producer of coffee in India.

Indian exporters are not able to cash on the high global demand due to payment problems from overseas, unavailability of packaging material, inability to understand post-Covid-19 demand and supply curve, and many of the ports were closed in the country.

"The reasons for international price rise in my opinion are due to weakness in the US dollar, demand as there is limited movement of stock due to covid19 and unfavourable weather conditions worldwide. The sustainability of these prices will be tested once the US election is over and the dollar will move towards its fair value", he added.