Coffee exports flat as growers retain produce for better prices

India’s green coffee exports are off to a sluggish start in the current calendar year as growers hold back their produce anticipating better prices, while buyers of arabica in Europe — mainly the roasters from Germany — are seen shifting to the less expensive Central American variety.

“There is a mismatch in price expectations of the growers here and the arabica buyers in Germany. The European buyers are not keen to pay what growers are demanding. As a result, we are ceding back the ground that we had gained in North and Central Europe over the past few years to Central American producers such as Honduras and Colombia,” said Ramesh Rajah, President of Coffee Exporters Association.

However, the robusta market for Indian exporters in Italy is intact, he added.

Ramesh further said that Indian exporters are not aggressively chasing arabica orders as the market arrivals are slow and that the Colombian and Honduran variety are cheaper by 5-7 per cent. “It is a peculiar situation. There’s a noticeable calm in the market,” Ramesh said, adding that the strengthening of the rupee against the dollar is also influencing the growers’ realisations.

Per the provisional figures issued by Coffee Board, the permits issued for arabica shipments are down by 46 per cent in the January 1-February 8 period over the year-ago period (see table), which reflects the reduced interest from buyers in the premium Indian variety.

However, the increase in demand for robusta parchment and instant coffees has resulted in flattish growth for shipments, so far.

Indian arabica presently commands a premium of about 15-20 cents over the New York terminal prices. Farm gate prices of arabicas range between ₹9,300 and ₹9,700 per 50-kg bag.

Growers, who believe there’s a global deficit in coffee this year, are seen holding back their produce. The harvest of arabicas is expected to be complete in a couple of weeks, while the picking of robustas has commenced in the key producing regions of Chikmagalur and Kodagu.

However, trade sources said the shift in preference of buyers to other origins was not a new phenomenon and that it occurs every two to three years. “It does not mean that our coffees remain unsold. Though the order books are thin this year, Indian coffees get easily absorbed in the world market considering that there is a global deficit,” sources said.

Trade sources estimate that about 25-30 per cent of the arabica crop and about a fifth of the robustas, currently being harvested, have already been traded.

The Coffee Board expects an arabica crop size of 96,200 tonnes — about 7 per cent lower than last year’s 1.035 lakh tonnes (lt).

Robusta output is pegged around 10 per cent lower at 2.205 lt from last year’s 2.445 lt. Total output is expected to drop 9 per cent to 3.16 lt from last year’s record 3.48 lt.

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