Premium pricing. Premiums for Indian robusta parchment coffee tops $1,000 a tonne

Premiums for the Indian robusta parchment coffee have rebounded and have topped the $1,000 per tonne levels over the London terminal prices after a gap of almost two years. This is mainly on account of lower than anticipated production of robusta parchment and growers holding back their produce anticipating higher prices.

Price differentials for the Indian robusta parchment AB, the niche variety, are currently hovering at around $1,100-1,200 per tonne over the LIFFE (London International Financial Futures and Options Exchange) terminal prices, while for the robusta cherry variety it is hovering around $375-400 per tonne.

Arrivals low

“The normal premium for Indian robusta parchment is between $750 and $1,000 per tonne. Last few years, we saw an unusual dip to absurdly low levels of $100-200, which was not justifiable due to too much parchment. Now, we are back and have recovered to the old levels. We are a little above normal but growers are not selling. A few trade houses, which are committed are forced to cover,” said Ramesh Rajah, President, Coffee Exporters Association.

On the exports front, Rajah said, “We are not seeing that much demand and the orders are not that good. Growers are sitting on the coffee, resulting in slower arrivals. Normally, February should be flooded with coffee in Chikmagalur, Hassan and Coorg, but arrivals are low. Some growers say the crop is low,” Rajah said.

Coffee shipments, based on the Coffee Board data, are down marginally at 64,180 tonnes during the January-February period this year compared with 66,018 tonnes a year ago. “Shipments are down marginally. Arrivals are slow. Obviously, the offering premiums are high while the traded quantity is less. India is priced out of the market. There is more need-based buying rather than heavy buying,” Rajah said.

Price spike

Farmgate prices of robusta parchment are currently hovering around ₹10,800-11,000 per 50-kg bag compared with ₹8,000-8,300 levels during December-end. Similarly, robusta cherry prices are hovering around ₹5,100-5,300 (₹4,300-4,550 in December). Arabica parchment prices are currently ruling at ₹15,800-16,000 (₹13,000-13,500), while Arabica Cherry prices are around ₹7,700-8,000 (₹6,450-7,000).

Jeffry Rebello, President, United Planters’ Association of South India (UPASI), attributes the rise in premiums for coffee to a combination of factors such as a substantial reduction in the production of robusta parchment, the weakening of the rupee, and a buoyant London and New York markets.

“The demand for robusta parchment is more or less constant, but this year there has been a substantial reduction, resulting in higher premiums,” Rebello said adding that in most places, the robusta production is down by 15-25 per cent due to unseasonal rains in January, the shortage of labour during picking season among other factors.

Also read: As coffee prices rebound, growers resort to more of ‘consignment sales’

Mahesh Shashidhar, Chairman, Karnataka Planters’ Association, said robusta output is down, because of which prices have been firming up. The harvest is almost complete with over 90 per cent of the growers finishing the pickings.

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