Bloomberg News

Coffee Output in India May Drop for First Time in Five Years

March 29, 2012

The coffee harvest in India, Asia’s third-biggest supplier, may drop for the first time in five years as dry weather in the main growing region delays crop blossoming, an exporter’s group said.

Robusta output may fall at least 10 percent to 15 percent in the year starting Oct. 1 as pre-monsoon rains, which usually come by mid-February, have been missing this year, Ramesh Rajah, president of the Coffee Exporters Association of India, said by phone from Bangalore. Blossoming, or the flowering period, has been delayed by more than a month, he said.

A smaller crop may pare exports from India, potentially boosting a 13 percent gain in robusta prices on the NYSE Liffe exchange in London this year. Global supplies will outpace demand by 818,000 bags in 2012-2013, below current market expectations of 1 million to 2 million bags, Societe Generale SA said on March 20. A bag weighs 60 kilograms (132 pounds).

“A lower crop would mean that we will miss our export target for next year,” said Anil Kumar Bhandari, a member of the Coffee Board of India. “Much will depend on the price in the international markets when Indian coffee is being sold.”

Robusta for delivery in May fell 0.5 percent to $2,047 a metric ton in London at 2:18 p.m. in Mumbai, while arabica for the same month declined 2.9 percent to settle at $1.82 a pound on ICE Futures U.S. in New York yesterday.

Record Exports

India’s shipments are forecast to fall by as much as 15 percent this year due to slowing economic growth in Europe, the nation’s biggest market, Rajah said. The country exported a record 346,850 tons in 2011, according to board data. Shipments climbed 5 percent to 99,423 tons between Jan. 1 and March 28, the board said on its website.

The harvest this year is estimated at 320,000 tons, including 103,725 tons of arabica and 216,275 tons of robusta, the board said on Feb. 13. A decline next year would be the first since the 2007-2008 season, when the harvest slid to 262,000 tons from 288,000 tons a year earlier.

“If it doesn’t rain by April 15, then we could have a big setback in the total crop production for robusta as well as arabica,” the exporters group’s Rajah said.

Temperatures in Karnataka state, the biggest producer, have been as much as 4 Celsius degrees (39.2 Fahrenheit) above normal this year, Rajah said. “Higher temperature plus dry weather means more moisture loss from the soil, so the plants are feeling the stress.”

Robusta coffee is grown mainly in Asia and parts of Africa and is used in instant drinks and espresso. Arabica beans are grown mainly in Latin America and are favored for specialty beverages such as those made by Starbucks Corp. (SBUX:US)

To contact the reporter on this story: Swansy Afonso in Mumbai at safonso2@bloomberg.net

To contact the editor responsible for this story: Richard Dobson at rdobson4@bloomberg.net


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