As the Indian robusta parchment price turns expensive in the world market on supply concerns, exporters fear that consumers of this speciality grade in Europe may shift to other origins such as Uganda and Indonesia.
Currently, the premiums for the Indian robusta parchment are hovering at $1,100-1,200 per tonne above the London terminal prices. Also, the differential for the Indian robusta cherry is higher at $375-$400 per tonne over the London terminal prices. While the normal premiums are considered to be in the range of $750-1,000 for Indian robustas, the current differential is a little above normal.
“India is out-priced in the market,” said Ramesh Rajah, President, Coffee Exporters Association, stating that “the high premiums for robustas are a risk.”
Considering the weak economic conditions in the West, consumers in countries such as Germany and Italy may shift their preferences to other robusta parchments from competing origins such as Uganda, Indonesia and even Vietnam, which has improved its quality, he said. “Traditionally, Uganda and Indonesian robusta parchment were priced above India, but with the improvement in our quality in the eighties we over took them,” Rajah said.
Premiums for Indian robusta parchment are up as the production is seen lower this year and the harvest is almost coming to an end. Parchment coffees are produced from fully ripened fruits that are extracted through a wet milling process and are dried in the sun. As the premiums had dropped in the last two years, there was hesitation to make more parchment among growers this year.
Besides, growers, who are anticipating prices to go up further, are not keen to sell their produce. Most of the robusta parchment is held by large growers who are in no hurry to sell. While the few trade houses, which have commitment, are forced to cover, resulting in a spike in premiums.
“You have to get a premium and it has to be justifiable. A premium of $750-1000 is a justifiable premium for the robusta parchment. I don’t see it dropping below $1,000,” he said.
India’s coffee exports in the current calendar year till March 2, were trailing last year’s levels at 67,560 tonnes, about 3.4 per cent lower over same period previous year’s 69965 tonnes.
Robusta parchment shipments for the said period are down by 34 per cent at 3058 tonnes over same period last year’s 4666 tonnes. Robusta cherry shipments are down by about a tenth at 31,038 tonnes (34,841 tonnes).
Arabica parchment shipments are higher at 8,326 tonnes (7,942 tonnes in the same period last year), while Arabica cherry exports are down 45 per cent at 1487 tonnes (2695 tonnes). The instant coffee exports led by higher domestic shipments and also re-exports are seen up at 23,560 tonnes (19,736 tonnes).