Domestic coffee prices seen firm

Supply concerns, harvesting delays may keep arabica, robusta prices up

Domestic arabica and robusta coffee prices are seen firm in the next few days due to tight supplies amid robust demand from roasters, traders and analysts said on Monday. Overseas coffee prices are likely to be range-bound amid low volumes due to Christmas holidays, they said.

DOMESTIC MARKETS
Coffee prices in domestic markets are likely to be firm in the next few days on supply concerns due to harvesting delays in coffee growing regions of Karnataka, traders said. Karnataka produces 75 per cent of the country's coffee.

"Harvesting of arabica coffee is delayed in Coorg and Chikmaglore districts of Karnataka due to heavy rains," said A N Devraj, proprietor, Sarathy Curing Works.

Last week, there were reports of rainfall in Tamil Nadu due to which harvesting is likely to be delayed in that state as well, Devraj said.

Also, firm demand from domestic roasters may support coffee prices in the week ahead.

However, export demand is still slack, but traders expect demand to pick up after the arrivals of new crop in January.

Currently, prices of raw arabica parchment coffee are around Rs 4,600 per 50 kg and they are likely to rise by Rs 100-200 in the next few days, Devraj said. Prices of raw robusta cherry coffee are seen steady at around Rs 2,000 per 50 kg, he said.

GLOBAL TRENDS
Overseas coffee prices are seen in a narrow range with a positive bias amid thin trade due to Christmas holiday season, analysts said. March arabica contract on Intercontinental Exchange US Futures is likely to trade in the range of $1.30-$1.36 (Rs 52-54) a pound in the week ahead, said Suresh Akkinneni, analyst, Transgraphic Consulting.

"However, fall in global coffee production will keep prices firm in the coming weeks," Akkinneni said. World coffee production in 2007-08 (Oct-Sep) is seen at 116 million bags (1 bag=60 kg), down from 125 million bags last year, he said.

On Friday, ICE March arabica contract ended at $1.3415 (Rs 53) per 1 pound, up 45 points amid light volumes. March contract on London International Financial Futures Exchange settled at $1,893 (Rs 73,961) per 1 tonne Friday, up $7 on speculative and fund buying.

In the next few sessions, March contract is likely to get support at $1,860 (Rs 73,842) per 1 tonne, and face resistance at $1,922 (Rs 76,303) per 1 tonne, Akkinneni said.

Prices in ICE March arabica coffee contract may move up to $1.40 per 1 pound, while prices in LIFFE March contract may increase to $1,975 per 1 tonne in the next two-three weeks, he said.