Coffee exports may fall 13% on lower inventory

Coffee exports from the country, the world's sixth-biggest producer, may fall 13 per cent this year on lower inventories and rising domestic demand, the Coffee Exporters' Association of India said.

India may ship 200,000 metric tonne of coffee this year compared with 230,304 tonne in 2006, Ramesh Rajah, the association's president said in a phone interview from Bangalore today. India exported only 2,170 tonne of coffee in the first three weeks of January, down from 11,324 tonne in the same year- ago period, according to the state-run Coffee Board of India.

Lower exports from the country may extend the past year's 31 per cent gain in prices of the bitter-tasting robusta beans, which are used in instant coffee by companies such as Nestle and Kraft Foods.

Global production in 2007-2008 will be 109 million to 112 million bags, less than total demand of 118 million to 120" million bags, the International Coffee Organisation said January 15.

"Exports have been sluggish so far as the early harvested arabica crop is lower,'' Rajah said. "Lower carry-over stock from a year ago has reduced availability of stocks for exports.'' India may produce 280,000 tonne of coffee in the year ending September 2007, compared with the Coffee Board's December estimate of 288,000 tonne, Rajah said.

The Coffee Board slashed domestic coffee production estimate 4 per cent from an initial estimate of 300,300 tonne after heavy rain and pests damaged parts of the crop. The crop totalled 274,000 tonne in 2006.

The Board has estimated robusta production to be 188,300 tonne and mild-tasting Arabica beans to total 99,700 tonne.

"Our estimate is that Arabica production will be lower than the board's estimate, while robusta may meet the target,'' Rajah said."The arabica crop may be lower by 15-20 per cent, but robusta may be higher by 5 per cent.''

India accounts for 4.5 per cent of global coffee production and exports as much as 80 per cent of its harvest to countries such as Italy, Germany and Russia. 
 

EXPORTS IN 2005-06
	In tonne	% of total	Rs/tonne
Italy	53393	26.5	68496
Russian Federation	29432	14.61	77551
Germany	16742	8.31	88049
Belgium	11190	5.55	75707
Spain	10292	5.11	61536
Slovenia	7458	3.7	55597
Ukraine	6920	3.43	88024
Greece	4392	2.18	59579
Finland	4245	2.11	78884
Japan	4147	2.06	89886

Rising domestic consumption may also depress overseas sales as the world's second-most populous nation consumes more coffee.

Starbucks Corp, the world's biggest coffee-shop chain, will enter the country in partnership with Kishore Biyani, founder of the country's biggest publicly traded retailer, and V P Sharma, head of the US company's Indonesian franchise. Starbucks will open its first stores in India by summer, its Chairman Howard Schultz said on February 1.

"Starbucks entry will give coffee a lot more visibility as a brew. Consumption should rise,'' Rajah said.

The country's coffee consumption has grown at an average annual rate of more than 6 per cent in the past six years compared with stagnant consumption in the previous eight years, according to the Coffee Board of India.

Indian exporters expect international coffee prices to remain steady and fetch an average of Rs 80 per kilogram ($1,814 a tonne) of coffee exported in 2007, up 2 per cent from Rs 78.4 a kilogram in the previous year, Rajah said.

Coffee for March delivery on London's Euronext.liffe exchange closed at $1,595 a tonne on February 2.