03-Sep-2013
KOCHI: Indian coffee exporters' plans to take advantage of a fall in rupee value have come unstuck because of a good production and the devaluation of currencies in other coffee producing countries. A huge production excluding some Central America regions has pulled down the prices of arabica and robusta varieties in the international market. Brazil, the largest producer, is harvesting a good crop although this is a lean year.
"The country is aggressively marketing its coffee to cash in on the devaluation of the Brazilian real. As a result, Indian exporters are finding the going tough," said Ramesh Rajah, president of Coffee Exporters Association of India. According to him, Brazil harvested a bumper crop of around 55 million bags (each bag of 60 kg) last year and production in the current season is expected to touch 49-50 million bags.
The currency in Indonesia, another major producer, has also taken a beating. However, torrential rains in Indonesia could damage the crop, giving some hope for Indian exporters as the country has been active in the market. Exporters are expecting the Indian currency to remain weak till a new harvest starts in November. "The realisation from exports will go up. But production cost will also go up as the prices of chemicals and fertilisers linked to petroleum imports could go up," said Coffee Board chairman Jawaid Akthar.
According to latest estimates of International Coffee Organisation, total production in crop year 2012-13 is around 144.5 million bags, a 7.7% increase over the previous year. Vietnam, the largest robusta producer, is expected to harvest a good crop of 23-24 million bags. Consequently, arabica and robusta prices have slumped in the international markets. "A weak rupee has held Indian coffee prices from falling in tandem with global prices," said an official with NKG Jayanti, a coffee exporting firm.
In the international market, arabica prices have fallen 10% since May to $1.18 per pound in futures trade on ICE New York. The drop in robusta prices is about 7% to $1,765 per tonne on Liffe. But Indian prices have remained more or less steady. Arabica parchment prices have stood at Rs 130 per kg while robusta prices have hovered around Rs 120 per kg. Exporters are hoping demand from Europe picks up after holidays in August.
Source:-articles.economictimes.indiatimes.com
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