Coffee exports from India, the world’s sixth-biggest producer, may fall 13 % this year on lower inventories and rising domestic demand, the Coffee Exporters’ Association of India said.
India may ship 200,000 metric tons of coffee this year compared with 230,304 tons in 2006, Ramesh Rajah, the association’s president said in a phone interview from Bangalore today. India exported only 2,170 tons of coffee in the first three weeks of January, down from 11,324 tons in the same year-ago period, according to the state-run Coffee Board of India.
Lower Indian exports may extend the past year’s 31 % gain in prices of the bitter-tasting robusta beans, which are used in instant coffee by companies such as Nestle SA and Kraft Foods Inc. Global production in 2007-2008 will be 109 million to 112 million bags, less than total demand of 118 million to 120 million bags, the International Coffee Organization said recently.
“Exports have been sluggish so far as the early harvested arabica crop is lower,” Rajah said. “Lower carry-over stock from a year ago has reduced availability of stocks for exports.”India may produce 280,000 tons of coffee in the year ending September 2007, compared with the Coffee Board’s December estimate of 288,000 tons, Rajah said.
The Coffee Board slashed India’s coffee production estimate 4 % from an initial estimate of 300,300 tons after heavy rain and pests damaged parts of the crop. The crop totalled 274,000 tons in 2006.The Board has estimated robusta production to be 188,300 tons and mild-tasting Arabica beans to total 99,700 tons.
“Our estimate is that Arabica production will be lower than the board’s estimate, while robusta may meet the target,” Rajah said. “The arabica crop may be lower by 15-20 percent, but robusta may be higher by 5 %.”India accounts for 4.5% of global coffee production and exports as much as 80% of its harvest to countries such as Italy, Germany and Russia.
Rising domestic consumption may also depress overseas sales as the world’s second-most populous nation consumes more coffee. Starbucks Corp., the world’s biggest coffee-shop chain, will enter India in partnership with Kishore Biyani, founder of the country’s biggest publicly traded retailer, and V.P. Sharma, head of the U.S. company’s Indonesian franchise. Starbucks will open its first stores in India by summer, its Chairman Howard Schultz said.
“Starbucks entry will give coffee a lot more visibility as a brew. Consumption should rise,” Rajah said.India’s coffee consumption has grown at an average annual rate of more than 6 % in the past six years compared with stagnant consumption in the previous eight years, according to the Coffee Board of India.Indian exporters expect international coffee prices to remain steady and fetch an average of 80 rupees per kilogram ($1,814 a ton) of coffee exported in 2007, up 2% from 78.4 rupees a kilogram in the previous year, Rajah said.Coffee for March delivery on London’s Euronext.liffe exchange closed at $1,595 a ton on 2 February.