Sluggish demand and an appreciating rupee are affecting coffee exporters’ realisations, even as prices continue to remain bearish on high global supplies.

“The order book is not that good, but we hope it should pick up,” said Ramesh Rajah, President of Coffee Exporters Association.

“We expect shipments in calendar 2013 to be same as last year,” he said. In calendar year 2012, India exported 3.10 lakh tonnes of coffee worth $925.7 million.

Low realisations

Though export volumes were marginally up in January, the realisations were hurt by a declining price and stronger currency.

In volumes, coffee exports grew 6 per cent at 25,594 tonnes in the January-February 4 period against 24,102 tonnes in the corresponding last year. In value terms, exports for the period were flat at around Rs 402 crore. The rupee has appreciated by 2.8 per cent against the dollar since the beginning of the year.

“The export orders are lower compared with last year,” said another exporter at Chikmagalur. Buyers are interested in Robusta cherry if the Indian exporters are able to sell at a reduced premium of $200 over Liffe prices, said an official at Mudremane Coffee, a Chikmagalur-based exporter. Presently, the robusta cherry commands a premium of $250-260 a tonne over London prices.

Prices decline

Prices of Arabica parchment, the premium variety that ruled at $3.07 per pound (lb) last year has more than halved and is trading at $1.44/lb. The prices have declined on higher output in countries such as Brazil, Colombia, Peru and Honduras. Besides, a global surplus estimated at $4.8 million bags is keeping the prices under check.

“Growers, who couldn’t offload at Rs 7,500 for a 50-kg bag a few days earlier, are now holding back their produce in anticipation of better prices” an exporter said. The Arabica parchment is currently ruling at Rs 6,800 against Rs 10,000 in the same period last year.

“We are hoping that prices will go up to a reasonable level so that our costs are covered,” said Bose Mandanna, a coffee grower from Kodagu. Input costs such as prices of fertilisers and pesticides, besides labour costs have seen a sharp increase in past year.

“We were hoping for support from the domestic market. Even that’s going down,” Mandanna said.

Crop size

The decline in Arabica prices is notwithstanding a drop in output due to the flare-up of white stem borer menace this year. Trade sources see a 10-15 per cent decline in Arabica variety from the estimated crop size of one lakh tonnes for 2012-13.

(This article was published on February 5, 2013)
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