Bloomberg News

Coffee Crop in India Seen Falling From Record on Weather

June 21, 2012

Coffee harvest in India, Asia’s third-largest grower, is poised to decline from a record after hot, dry weather delayed crop blossoming and a pest attack cut yields, potentially lowering exports.

Output may decline 10 percent to 12 percent in the crop year starting Oct. 1 from 320,000 metric tons this year, Anil Kumar Bhandari, a member of the state-run Coffee Board of India, said by phone from Bangalore.

Robusta futures climbed 15 percent this year, jumping to the highest level in almost nine months in May, on speculation supplies will be limited next season as consumption of the beans used in instant coffee continues to increase. Demand may rise by about 1 million bags in the 2012-2013 season, with supplies about matching demand at 58 million bags, according to CoffeeNetwork, a unit of INTL FCStone Inc.

“A decline of 10 percent to 15 percent is on the cards for exports next season,” Ramesh Rajah, president of the Coffee Exporters Association of India, said in a phone interview. “The beneficiaries would be Vietnam and Indonesia as buyers will import more from these origins.”

Exports have dropped 2.5 percent to 195,503 tons since Jan. 1, according to the coffee board. Sales were a record 344,301 tons last year, board data showed. The country ships more than 70 percent of its crop to mostly buyers in Europe.

Robusta for delivery in September fell 0.7 percent to $2,086 a ton on the NYSE Liffe exchange in London yesterday. Arabica for delivery in the same month declined 4 percent to $1.524 cents a pound on the ICE Futures Exchange.

‘Economic Malaise’

Prices are poised to fall further as the global economic slowdown and the European debt crisis cool demand, Rajah said. Robusta futures may drop to $1,900 a ton “in the near term,” he said. “There is less buying interest, less inventory holding and funding is down because of the general economic malaise.”

India’s robusta harvest may drop due to lack of rains at the time of blossoming, while arabica plants are hit by attacks of white stem borer, Bhandari said. Rains are critical during blossoming, or the flowering period, for development of beans.

“Arabica has had very reasonable blossom showers, but subsequently there has been a long drought period,” he said. “Arabica has been hit very badly by the white stem borer.”

Pest attacks such as the white stem borer have a longer- term impact as it destroys the plants and it takes four years before a newly-grown coffee plant can be productive, according to the exporters association.

India’s monsoon had a slow start this year after reaching the southern state of Kerala four days later than the usual date of June 1, and was 26 percent below a 50-year average, the India Meteorological Department said yesterday. Rains this year will be 99 percent of the average, the bureau predicted in April.

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

To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net


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