India's Coffee Exports Rise 6.2 Percent - Aug 01 , 2008

MUMBAI: India's coffee exports rose 6.2 percent during the first seven months of 2008 on firm export demand from European countries, an official from the Coffee Board said on Friday.

Total exports were 150,927 tonnes during Jan-July, compared with 142,132 tonnes a year-ago, the official, who did not want to be identified, told Reuters. India produces only 4 percent of the world's coffee, but exports 70-80 percent of its output.

Coffee Output Seen Up On Helpful Weather - June 17, 2008

Chennai: Good and well-distributed rainfall during October 2007-March 2008 is seen as the primary reason for a rebound in the country's coffee production during 2008-09 (October-September) season by nearly 12 per cent.

According to Coffee Board's post-blossom estimates, coffee production next season is expected to be 2.93 lakh tonnes (lt) against 2.62 lt this season. Of the 2.93 lt, arabica is estimated to be one lt and robusta the rest. Last year, arabica output was pegged at 92,500 tonnes and robusta 1.69 lt.

"Good and well-distributed rainfall during October-March helped in moisture retention for longer period which in turn helped in the production of bearing wood for the crop during the current season. Further, the blossom and backing showers were reported to be good and adequate in almost all coffee-growing zones of Karnataka," the board said on its Web site while putting out the estimates.

The post-blossom estimates are made after the coffee flower blossoms and setting of the fruit begins.

The board also said that lower crop last year coupled with good weather and bush condition and better husbandry practices had helped in production regaining ground in Karnataka zone.

Meanwhile, provisional exports from January 1 to last weekend have been pegged at 1.21 lt against 1.16 lt. However, minus re-exports, the figures show a marginal dip (1.09 lt versus 1.10 lt).

In Karnataka, the increase in production is more pronounced in Hassan where the crop is up 46.28 per cent over last year, while output in Chikmagalur and Kodagu is seen up at 12.64 per cent and 5.22 per cent respectively.

Again rise in robusta is more (59 per cent in Hassan and 20 per cent in Chikmagalur). In arabica, the increase is 40 percent in Hassan and surprisingly, it is down in Kodagu by 1.5 per cent.

For the oncoming season, Karnataka will account for 73 per cent of the total crop, followed by Kerala. In Kerala, timely rains have helped, while the crop being free of any adverse effect in Wayanad and Travancore has also helped. Production in Kerala is pegged at 57,200 tonnes.

TN situation

On the other hand, production is expected to decline in Tamil Nadu. This is because arabica is a biennial crop and last year it was an "on" one. Also, blossoming in the State was hit by continuous rains during December-March, compounded by low temperatures.

Last year, coffee production, which was expected to be 3 lt, was affected by heavy rains in the growing regions which led to the plants developing wet feet.

This particularly affected robusta production. The wet feet phenomenon is a sort of coma stage for the crop whose roots fail to work and do not consume nutrients and respond to sunlight.

NMCE To Focus On Coffee Futures

Kochi: The National Multi Commodity Exchange of India Ltd (NMCE) is going to focus more on coffee futures trading to increase the volume and participation.

Anil Mishra, CEO, NMCE, told newspersons here that the exchange plans to conduct a series of road shows in Kerala and Karnataka.

They are also planning to launch a new variety of Robusta Cherry EP futures contract at the exchange and is going to apply for permission to launch the new product before the Forward Markets Commission, he said.

In addition to the existing CWC facilities, the exchange also plans to open delivery centres in Wayanad, Kushal Nagar, Hassan, Chikamagalore.

The exchange is planning for a minimum lot of one tonne so that more participation can be ensured, he added.

Liffe Coffee Futures Settles With Smart Gains

The Robusta Coffee futures settled with smart gains on Thursday on Euronext. Liffe. The commodity slumped in the Wednesday’s trading sessions. In Thursday’s trading sessions, the benchmark July Robusta Coffee futures contract settled with profits of $ 46 at $2164, traded in the ranges $2178-$2109 per tonne. All other months’ futures contracts settled with profits in the ranges of $40-$46 per tonne.

Growth In Consumption May Drive Demand For Coffee

Kochi: If the current growth in coffee consumption in certain countries continued to persist there will be a corresponding increase in demand for the beverage in the world market.


The per capita consumption of coffee in Brazil is at 6 kg and at this rate of growth it would join the US by 2010 as one of the largest coffee consuming market, according to a report. There will be around 20 million consumers in less than three years, it said.

Potential for growth

Another region where there is a potential for growth in coffee consumption are the coffee growing countries in Africa. Ethiopia, which is the largest producer of coffee in the continent, has a per capita consumption of 4 kg only. “If the 110-million people in the East African nations could raise its domestic consumption to 2 kg a person, it would consume three-quarters of its output.” At the same time, the output growth in Africa continued to show a declining trend.

Africa, which used to have one-third share in the world production in the 1970s, has reduced its share to 12 per cent now. This phenomenon has also contributed to the decline in world output. In fact, Africa has one-third of the total area under coffee in the world.

According to the International Coffee Organisation (ICO), African coffee production and quality had been affected by liberalisation of the sector which has allowed unscrupulous individuals to join the coffee marketing without conforming to the best practices. He said that it is important to strengthen the coffee sector and promote its sustainable expansion in a market-based environment for the betterment of all the participants in the sector.

Tight supply position

However, there exists a tight supply position in the world coffee market now and a “fundamental balance is taking place”, according to industry sources.

During 2007-08, there was a sharp fall in global coffee supply and as a result there was a near equilibrium in demand and supply, Anil Kumar Bhandari, former President of Upasi and a grower told Business Line. Add to this, the declining trend in the equity market had paved the way for a shift towards the commodity markets, he said.

The price in the International Coffee Exchange (ICE) New York was moving up and March contract on Monday was quoted at 165.40 cents/lb, Bhandari said. The tight supply position was likely to continue as the growers world over were holding their crop anticipating that the prices would go up. The roasters were, in fact, buying hand-to-mouth, he pointed out.

The total supply during 2007-08 was estimated at 89.46 lakh tonnes (lt) against 94.51 lt in 2006-07. Exports in 2007-08 dropped to 57.79 lt from 60.73 lt.

The Indian output has also declined and, as a result exports during January 1 - March 5 fell to 37,899 tonnes from 40,086 tonnes in the same period last year.

Given this scenario, the green coffee prices continued to rise sharply over the past three weeks, industry sources added

Rains To Help Boost Coffee Output

MUMBAI: The February rains will make the coffee farmers happy with an expected jump in production.

The coffee growing areas in sought India, especially Karnataka and Tamil Nadu, received good rains during the first week of February which will boost the flowering of coffee plants.

According to the Coffee Board officials, the country’s coffee crop will gain from the rains.

The rains are certainly going to be beneficial for the next Arabica crop to be harvested in October.

The rains led to dropping of beans in some plantations of Robusta, a variety used in instant coffee.

A bigger crop in India, which exports 80 per cent of its output, may help slow this year’s 35 per cent gain in Robusta coffee prices.

The Futures touched $2,625 a tonne this week on London’s Liffe exchange, the highest in almost 11 years.

India’s coffee production may reach 262,000 tonnes in the year to September 2008, 10 per cent lower than the 291,000 tonnes forecast in July by the government, the Coffee Board said in December. The crop totaled 288,000 tonnes in a year earlier.

Exports may total 210,000 tonnes in the year ending March 31, 16 per cent lower from a year earlier. India exported 182,431 tonnes in the April 1-February 21 period.

High Premium For Washed Robustas Draws Buyers’ Ire

Chennai: Five years ago, using robusta coffee in the Italian Xpresso coffee was unthinkable. Today, Indian washed robustas are being used instead of arabicas in Xpresso coffee. As a result, they began to command a premium in the global market up to nearly $500 a tonne.

With robusta prices in London ruling at over $2,100 a tonne, sellers of Indian washed robustas are demanding a premium of $800. Things, however, have run into rough weather with buyers resisting the high premium and even threatening to replace the washed robustas with arabicas from South America.

“Buyers are threatening to stop procuring our washed robustas since they think we are seeking a higher premium. It has to an extent affected exports in January of the grade, also known as robusta parchment,” said Ramesh Rajah, President of the Coffee Exporters Association.

Though provisional coffee exports figure shows a rise in January shipments to 14,172 tonnes from 14,122 tonnes a year ago, robusta parchment sales abroad are down more than 50 per cent at 226 tonnes against 561 tonnes.

Artificial boost

According to the Coffee Board, robusta parchment AB enjoys a premium of $530 over robusta coffee traded in London.

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Coffee industry sources said the premium had been artificially raised, though supply of the grade was tight in the global market, mainly from India and Vietnam.

“Buyers are not ready to give such a high premium for the washed robustas. But the problem is they can’t change the blend of the coffee with our produce overnight from 100 to zero. It will happen slowly and they will keep reducing,” Rajah said.

Exuding confidence

According to plantation sources, it will be difficult to replace washed robustas in Xpresso. “Roasters and buyers will have to accept that high or low prices are part of our business. No one can match our quality in the robusta sector,” they said.

“It is wishful thinking on the part of some roasters that they can replace our washed robustas with mild arabicas from South America, especially Colombia,” the sources said.

The confidence of the plantation sources stems from the fact that coffee exports to Italy, seen as market for quality coffee, have increased significantly in the recent years and Indian coffees have penetrated deeply in that market mainly on marketing efforts.

Note of caution

According to the Coffee Board, exports to Italy have increased from 41,842 tonnes during 2001-02 to 62,807 tonnes (provisional) during 2006-07. In terms of the share of total coffee exports from the country, it has increased from 19.59 per cent to 26.50 per cent in 2005-06 before slipping a tad to 25.32 per cent last fiscal.

But a section of the industry feels, the buyers’ threat could be for real. “Today, washed arabicas are being blended in Trieste, Italy and Hamburg, Germany. Technology is available in these places to replace our washed robustas with other grades of coffee. It is possible with technology to match the Indian flavour,” they caution.

Initially, Indian robustas had commanded very high premium but it had declined gradually with Vietnam making rapid strides in robusta production. The South-East nation now tops in global robusta production.

Currently, farm-gate prices of robusta parchment are about Rs 500 a bag (of 50 kg) lower than arabica parchment at Rs 4,150-4,200. In London, on Monday, robusta was quoted at $2,146 with fund buying propping up the beverage to its highest since November.

Unit Value Of Coffee Exports Declining

Bangalore: The International Coffee Organisation (ICO) has said the unit value of exports has been falling constantly for a number of coffee producing countries including India. The ICO has also revised world coffee production from 114 million bags to 116 million bags and has expressed concern over weakness of the US dollar. Coffee exports in November 2007 were seven million bags, bringing total exports for the first 11 months of 2007 to 87.4 million bags, an increase of 4.4 per cent compared to the same period in 2006. As for the prices, they rose sharply in December 2007, particularly in the Arabica variety, with the monthly average of the ICO composite price standing at 118.16 cents a pound compared with 114.43 cents a pound in November 2007. While Robusta prices were slightly down in December, they remained firm and broke the $1 barrier on January 11, 2008, for the first time in nearly 12 years. The price of 100.35 cents for Robustas on January 11 is over 363 per cent higher than the price of 21.65 cents on October 11, 2001. The country's production in 2007-08 was 33.7 million bags, comprising 23.5 million bags of Arabicas and 10.2 million bags of Robustas.