The Hindu Business Line : Coffee exporters bet on more orders as stocks dip

Up a tad: A worker tending to coffee plant at a plantation near Meppady in Kerala’s Wayanad district. Coffee exports, provisionally, have increased to 1.97 lakh tonnes during January-September against 1.90 lakh tonnes during the same period a year ago. –

Our Bureau

Bangalore, Nov. 3 Coffee exporters are hopeful of order pick-up in coming months as stocks decline even as the recessionary trends cast a shadow on global consumption. Current order books for Indian exporters are thin compared with last year as buyers adopt a wait-and-watch stance in view of recent price decline. Also, a volatile currency has forced buyers to go slow on order bookings.

“Enquiries are on, but orders are not placed. Orders are 30 per cent of what it was last year,” said Mr Ramesh Rajah, president of Coffee Exporters Association. Normally, Indian exporters start getting orders from the second half of September, ahead of the harvest season that begins in November-December.

Price drop

Impacted by the economic crisis, coffee prices, like other commodities, have declined in the past three months. One major reason for the steep drop was due to the hedge funds unwinding their commodity positions. As a result, prices of arabicas have dropped to $1.1 a pound from $1.5 three months ago. Robusta prices have touched less than $1,600 a tonne compared with $2,600 three months ago.

“We need some stability in the markets for the confidence to come back,” Mr Rajah said. Coffee exports for the first ten months increased by three per cent to 1.96 lakh tonnes compared with 1.96 lakh tonnes in the corresponding period last year.

Mr Shaji Philip, Chairman of Upasi Coffee Committee, said exporters were hopeful of orders to materialise in coming months as global stocks decline. Mr Philip said roasters had a global stock of 5.8 million bags of arabicas as of end-October that would meet the demand for 19 weeks, while the robusta stocks stood at 2.6 million bags, which would take care of demand for 10 weeks.

Mr Rajah expects growth in consumption to slow down a bit because of the reduced off-take due to recessionary conditions especially in emerging markets such as Eastern Europe and Russia. Though consumption in Western Europe would shift from high-end premium varieties to cheaper coffees, the off-take would be hit in Eastern Europe, he said.

illycaffe, the world’s largest roaster of Espresso coffee, recently said the economic crisis would have a marginal impact on consumption in the US and Europe.

Lower crop this year?

The coffee crop for 2008-09 could be lower than expected as untimely rains during the early part of the year and more recently in October have impacted the output, said Mr Bose Mandanna, a grower and former vice chairman of the Coffee Board.

The post-blossom estimates of Coffee Board peg the 2008-09 crop size at 2.93 lakh tonnes.

The Board is yet to come out with the post-monsoon estimates. However, Mr Mandanna said the crop could be lower at 2.2-2.3 lakh tonnes.

More Stories on : Coffee | Exports & Imports

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page