The Hindu Business Line : Rupee effect: Coffee exporters stop signing new orders

Brewing problem
Permits issued for coffee exports till May 14 were 91,866 tonnes against 87,169 tonnes during the same period a year ago.
The rupee has gained from 44.20 to the dollar since the beginning of the year to 40.96.

Chennai May 15 Coffee exporters have stopped booking new contracts in view of the gain the rupee has made against the dollar and their differences with growers on the offer prices.

"No contracts are being signed for exports. Any shipments being down now are those contracted already," said an exporter from Bangalore.

Incurring losses

According to Mr Milan Shah of the Jayanthi Group, exporters are incurring losses between eight per cent and nine per cent in fulfilling their commitments.

Trade sources said growers were reluctant to offer coffee at lower prices. "Growers are not ready to scale down their prices. They may have to lower their prices by 8-9 per cent. Exporters are, therefore, reluctant to buy coffee," Mr Shah said.

Monsoon problem

While availability of stock is not a problem, the trade perceives a change in the situation with monsoon round the corner. "Growers will have to decide fast on selling their produce. Once monsoon sets in, they will have problem in disposing of their stocks. Also, it will affect the quality of coffee," trade sources said.

According to the India Meteorological Department, the monsoon is set to arrive a week ahead this year around May 24.

Export permits up

As per the data posted on the Coffee Board's Web site, permits issued for coffee exports till May 14 were 91,866 tonnes against 87,169 tonnes during the same period a year ago. Actual shipments reported are 66,880 tonnes against 81,511 tonnes. Actual exports are likely to be higher than this since exporters take at least three weeks to report on the shipments.

On Tuesday, the rupee declined to 40.96/7 against the dollar from 40.88 on Monday. The rupee has gained from 44.20 to the dollar since the beginning of the year.

Farmgate arabica parchment prices are currently being quoted at Rs 4,005-4,280 against Rs 4,325-4,400 in early March for a 50-kg bag, while robusta cherry is ruling at Rs 1,660-1,715 against 1,610-1,650.

Robusta prices are being quoted higher due to lack of stocks, especially in Vietnam.

Record Vietnam prices

Also, prices in Vietnam are ruling at record high as the Vietnamese dong hasn't increased the way Indian rupee has against the dollar, according to trade sources. Vietnam robusta 2,5 grade is being quoted around $1,600 a tonne f.o.b Ho Chi Minh City.

Exporters here are quoting $1,800 a tonne f.o.b Cochin for robusta cherry AB, while arabica plantation grade A is quoted at $2,850.

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