Planters upbeat on coffee export price firming up

Peak consumption season to begin in North America & Europe which will boost prices

On the occassion of International coffee day, offee planters have a reason to rejoice. They are upbeat on export prices firming up in the ensuing quarter (October-December) on surging demand for the beans, especially in traditional and emerging markets.

“The downward trend in Arabica price is over and there will be an upswing in the coming months as the peak consumption season begins in North America and Europe in the upcoming winter,” planters said.

Arabica prices declined 42% to $1.75 per pound (lb) from a high of $3 in March-April of 2011 in light of bumper crop and release of stock pile in Brazil this year. Slackening of exports to Europe Union also added to the price drop.

As the Brazilian harvest is almost over, exporters believe the prices will firm up in the next quarter. However, fall in Robusta price was modest during this year and presently traded at $2,150 per tonne.

Brazil harvested a bumper crop of 50.6 million bags as it entered the ‘on-year’ (good season) of the biennial cycle. However, the International Coffee Organisation (ICO) is yet to come out with an official estimated for 2012 season.

“The bumper crop in Brazil has been factored in this price drop. With the next crop year being an ‘off-year’ (bad season) in Brazil and the peak consumption season coming up in Europe and North America (December to April), we expect the prices to firm up by end of this year,” Marvin Rodrigues, Chairman, Karnataka Planters’ Association (KPA) told Business Standard on the margins of 119th annual conference of planters here.

Coffee exporters expect the prices to recover further and hover around $2 per lb in the coming days, if not more. “With the peak winter consumption coming up in importing countries we expect prices to firm up. However, it is too premature to say what would be the price levels by December. As overall global consumption is going up, we expect the prices to be better ahead,” Vijayan Rajes of Tamil Nadu-based MSP Plantations said.

Given the robust consumption growth across countries, the price decline appears to do more with market sentiments. Demand surge is likely to continue in emerging economies in addition to the growth in niche markets, the planters said.

During 2011-12, India’s exports were up 9.1% to 345,423 tonnes against 316,504 tonnes in the previous year. In value terms, the exporters earned Rs 4,851.52 crore, up 31.8% over the previous year and the unit value went up 20.8% to Rs 140.45 per kg.

However, it would be a huge challenge for Indian coffee exporters to repeat the past performance as there are no signs of let up in the debt crisis in Euro zone, which is India’s principal export market.

Exporters feel that the incentive scheme of Re 1 per kg for high value coffee exports to countries like US, Canada, Japan, Australia and New Zealand should ward off the decline in exports to Europe to some extent.