Coffee prices may ease from January

Coffee prices may ease from January

New Delhi: Indian coffee prices, ruling above global rates, are expected to ease marginally from January when the new crop arrives, traders said on Thursday.

Arabica is being quoted at Rs102 per kg, around Rs5 higher than international prices, while robusta’s are higher by Rs2, Milan Shah, managing director of leading exporter Jayanti Group, said. “Prices have been higher, but I do not believe they are going up further and there will be parity by January, when the new crop starts trickling in," Shah said.

India sells 70-80% of its output despite producing only 4.5% of the world’s coffee.

Trade and government officials are trying to promote local demand to reduce reliance on exports, but without much success.

Next year’s crop is expected to be about the same size as 2007’s so the drop in prices will not be substantial, said Anil Kumar Bhandari, former president of United Planters’ Association of Southern India.

The country is likely to produce around 290,000 tonnes of coffee in 2008, almost unchanged from the previous year, said Bhandari, a member of the state-run Coffee Board.

“Coffee production would have been higher had excessive rains in South India not affected trees when they started to bear fruit," a Coffee Board official, who did not want to be named, said.

Exporters believe overseas sales will be slightly higher next year against an expected 200,000 tonnes this year, said Ramesh Rajah, president of the All India Coffee Exporters’ Association.

Exports fell 12% on year to 192,492 tonnes in the January-October period as a rise in the value of the rupee against the dollar hit exports.

“We can expect a major boost in exports only in the next five years or so when production is likely to rise due to a replantation package announced by the government ... there will not be a substantial jump before that," Shah said.

Growers plan to replant on 80,000 hectares with the government announcing it will provide Rs410 crore.