Coffee production may see 14% drop due to heavy rains in South India

Exports down by 11% due to low Robusta crop

Coffee production is expected to come down by 14 per cent as against last year's post-blossom estimates. The crop loss due to heavy rains in the traditional coffee tracts in South India is estimated to be around 75,000 tonnes. 

According to the Coffee Board, the total post-blossom estimate in 2017-18 was 350,400 tonnes, including 103,100 tonnes of Arabica and 247,300 tonnes of Robusta. 

The Coffee Board has made an initial assessment of 1,500 hectares of land lost and a crop loss of 82,000 tonnes. 

However, compared to the estimates made at the beginning of the season at sowing tome, the loss looks even bigger at 20 per cent. "We expect a total crop of 300,000 tonnes as against our pre-monsoon estimate of about 375,000 tonnes," said Ramesh Rajah, president, Coffee Exporters Association. 

The estimate for the 2018-19 season is 85,000-90,000 tonnes of Arabica and 200,000-210,000 tonnes of Robusta. 

Rajah said that due to the flood, the coffee industry has been directly hit. 

"There are many numbers being mentioned and so making a reasonable crop estimate is difficult. The extensive damage to the infrastructure also will make recovery difficult," said Rajah, adding that the association came out with the crop loss number based on talking to various industry players.   

He added that Indian coffee exports are running lower this year at 212,607 tonnes as against 240,094 last year, mainly due to a lower Robusta crop. The coffee industry has been forced to use more coffee from other origins to keep total exports almost on par. 
 

On prices, industry representatives have said that prices of Arabica dropped from Rs 10,000 for 50 kg at the beginning of the year to Rs 6,500 at present. Last year, the prices were around Rs 8,200 during the same period. Robusta prices stood at around Rs 7,100 per 50 kg, as compared to Rs 6,200 in early 2018 and Rs 7,400 last year, due to high demand internationally and production being low. 

The price of coffee Robusta and Arabica has been on a steady decline over the last couple of years. There have been occasional seasonal variations but, on the whole, the price looks bearish in the last couple of years, says Rohan Colaco, one of the leading planters in Karnataka and a member of Karnataka Planters Association. 

The high-quality Arabica is selling at a discount to the Robusta due to higher output in growing areas with enough supply for coming years. Robusta, on the other hand, is holding on to its price. The devaluation of currencies is supporting this and the demand-supply gap is increasing. However, eventually, Robusta, too, will give in to the market forces. 
 

Coffee and crude are the largest traded commodities in the world. According to ICE New York, early this month, the price of Arabica was at $98.95 per pound and, for December 2018, the price is projected at $96.70. From March next year, prices are expected to increase and would settle down at $102.45. 

Robusta prices dropped to $1,606 a tonne from $1,621 a tonne and prices are expected to drop further to $1,487 next month. They would touch $1,492 in January 2019, according to the London International Financial Futures and Options Exchange (LIFFE).