The fall of the Indian currency against the US dollar in the last few weeks has given a ray of hope to coffee exporters, who have been experiencing a bearish sentiment since the beginning of this year.
Arabica bean exports have declined close to 40 per cent since January 1 because of a combination of factors, including a drop in prices.
In the international market, the prices at present are at 130-140 cents per pound (about 450 gm) — a decline of 27 per cent compared to 180 cents per pound in October and November last year.
Also, the higher premium charged by the Indian exporters for Arabica beans has led to drop in exports between January 1 and May 14.
Since mid-January, the Indian currency has depreciated over three per cent to Rs 63.68 against the dollar, thereby giving hope to exporters. Though the prices of coffee beans are low currently, they can look for higher recovery, exporters said.
“Rupee depreciation always helps exporters. But, this time, it is not enough to make a big impact. Exporters had contracted at Rs 62.50. They can benefit out of the current depreciation only when they start booking orders at this rate. This means, we have to wait for some more weeks to benefit from it,” said Ramesh Rajah, president, Coffee Exporters’ Association.
He said with summer holidays round the corner in Europe, coffee buyers there will not negotiate immediately as the consumption will be less. “However, we are optimistic on recovery in bean exports in the coming days on the back of rupee depreciation provided the rupee maintains the same level or falls further,” he said.
Between January 1 and May 14, India’s coffee exports declined 6% to 130,528 tonnes compared to 138,729 tonnes during the corresponding period last year. Arabica beans exports stood at 24,814 tonnes as against 39,223 tonnes in the same period last year, showing a decline of 37%.
“The drop in Arabica is largely due to high premium of 60-70 cents per lb (pound) charged by the exporters over the New York terminal price, while the premium for Colombian coffee was far less at around 10 cents. As a result Indian Arabica exports declined almost 40% this year. We do not see any upward swing in prices in the next few months and the New York terminal prices will remain range bound at 130-140 cents per lb,” Nishant R Gurjer, former chairman of Karnataka Planters’ Association and an exporter said.
|Coffee exports (Jan 1 to May 14)|
|Value (In Rs Cr)||2260.04||2213.79||2.08|
|Source: Coffee Board|
Higher premium is attributed to shortage due to lower Arabica crop and demand for washed Arabicas.
Ongoing bearish sentiment in the international coffee market is likely to continue for the next one year as bean stocks in importing countries have reached a record 22 million bags compared to 18.8 million bags in December 2013.
According to International Coffee Organisation, consumer stocks are currently well supplied with the record export volumes.