Agri Business

Supply constraints brew Robusta parchment to new highs

Vishwanath Kulkarni | | Updated on: Apr 29, 2022
India’s coffee output for 2021-22 crop year is pegged at 3.48 lakh tonnes

India’s coffee output for 2021-22 crop year is pegged at 3.48 lakh tonnes

Low prices during harvest force growers to shift from wet process to dry process

Prices of Robusta Parchment or Washed Robustas, one of the specialty grades, have shot up by a fifth over the past two months to hover around record levels of ₹10,000 per 50 kg bag on supply constraints. This, even as exporters see demand from customers in Europe, the major destination for the Indian beans. Also, the premiums commanded by the Indian Robusta Parchment AB over the London terminal prices have almost trebled since early March, indicating strong buyer interest.

Farmgate robusta parchment prices are hovering around ₹9,500-10,000 levels for a 50-kg bag compared with ₹7,850-8,250 levels in early March. In early February, prices of Robusta Parchment were hovering around ₹7,000 levels and the premiums were around $150-200 per tonne over LIFFE prices. Now, the premiums have shot up to $1,200-1,250 over the benchmark London terminal prices.

Ramesh Rajah, President of the Coffee Exporters Association, attributes the flare-up in prices to a decline in production of robusta parchment as growers this cropping season opted to produce more cherry coffee through the dry process as the prices of wet processed parchment were lower during the harvest period.

Rajah said robusta parchment output is below 18,000 tonnes for the 2021-22 crop year against 25,000-30,000 tonnes in the past couple of years. Further, the large growers are not selling their produce, he said.

Exports up 52%

Exports of Robusta parchment from the beginning of the year till April 29 were up 52 per cent at 11,112 tonnes compared with 7,284 tonnes in the same period a year ago. Overall, coffee shipments during the period are up around 28 per cent at 1.18 lakh tonnes over 92,387 tonnes a year ago.

Rajah attributed the growth in shipments to the commitments from the previous year. While the demand exists for the robusta parchments, exporters are seen deferring shipments while some of them, mainly the multinationals, are also offering buyers an alternative washed Indonesian robusta. The washed and polished Indonesian robusta parchment are also less expensive compared to the premium that the Indian variety commands.

Bose Mandanna, a large grower, said the prices of the niche grade robusta parchment are at a new high this year on lower output. Due to the lower prices during the harvest season, many growers preferred not to covert into wet-processed parchment as it entails an additional cost of ₹4,000 per tonne compared to the dry processing of cherry coffees. Also the parchment production process is water intensive.

According to the Coffee Board, India’s coffee output for the 2021-22 crop year ending September, according to the post-monsoon estimate, is pegged at 3.48 lakh tonnes, of which Robustas production is seen around 2.49 lakh tonnes and Arabica at 99,000 tonnes. It is estimated that less than 20 per cent of the robusta coffees are wet-processed and the remaining volumes are dry-processed (cherry coffee).

Published on April 29, 2022
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