The Hindu Business Line : Coffee growers waiting for better days

"Export demand has slowed down as most of the exporters and growers are looking for better prices. And not only in India but also in Brazil, the growers and exporters are looking for their currency to fall against the dollar," said Mr A.K. Bhandari, former President of the United Planters' Association of Southern India (Upasi).

Currently, coffee prices are recovering though they are off highs reached a couple of months ago, said Mr Bose Mandanna, former vice-president of the Coffee Board.

"For example, arabica parchment touched a high of Rs 4,600 for a 50-kg bag in January. The prices declined to Rs 3,950 but currently they are Rs 4,100," he said.

Similary, robusta cherry has also recovered to Rs 1,400, though its prices touched Rs 1,600.

The rupee and Brazilian real have gained significantly during the last couple of weeks.

In the global market, arabica futures for benchmark May contracts closed at 112 cents a pound, while robustas for May delivery ruled at $1,220 a tonne in London.

Rupee's gain

The rupee has gained 1.5 per cent since the beginning of the year. On Monday, it ruled at 44.37 to the dollar. "Growers will get better returns only if the rupee is weaker against the dollar," Mr Bhandari said.

Mr Mandanna said with the Brazilian crop projected at 40-42 million bags of 60 kg, buyers were in no hurry to buy at high prices. "But there could be a spike in May as the winter sets in the southern hemisphere. We see a severe southern hemisphere as in the northern part," he said. Prices then could rise and decline.

Also, with March shipments over, there is no hurry to meet export obligations as there was till time for May shipments, according to Mr Mandanna.

According to the Coffee Board, permits were issued to export 31,446 tonnes till February 21 this year against 32,891 tonnes during the same time a year ago. Confirmed shipments during the period totalled 12,817 tonnes against 28,327 tonnes.

Mr Bhandari said current prices were higher than the ones that prevailed in 2004. "Prices are 30 per cent higher than the low prices of 75-77 cents we witnessed in 2004. The good returns should help growers wipe out the losses they have suffered in the last five years," he said.

Arrivals improving

Meanwhile, arrivals of the new crop are improving slowly. Mr Mandanna and Mr Bhandari said arabica crop was lower than the revised estimates. But robusta was turning out to be better than expected going by the feedbacks they were getting, they said.

The Coffee Board has pegged the output for the current season (October 2005-September 2006) at 2.81 lakh tonnes from initial estimates of around 2.94 lakh tonnes. Of this arabica is projected to be 98,550 tonnes and robusta the rest. The projections are, however, better than last season's 2.75 lakh tonnes.