Mumbai: Coffee output in India, Asia’s third largest exporter, may drop for the first time in six years after dry weather hurt flowering and cherry formation. Shares of exporters declined in Mumbai.

“The harvest in the year starting 1 October may be less than the record 315,500 tonnes in 2012-2013 as plantations of the robusta variety in some areas missed rains during the flowering stage," Anil Kumar Bhandari, a member of the Coffee Board of India, said by phone from Bangalore. That would be the first drop in output since the 2007-2008 season, board data showed.

Reduced supplies from India, where robusta accounts for 70% of the output, may help extend the advance in prices of the bitter-tasting beans for a second year. That may increase costs for instant drink and espresso makers such as Nestle SA. Growth in global supplies will be limited even as the production outlook improves in Vietnam, the largest robusta grower, after initial concerns that dry weather has hurt the crop, according to Macquarie Group Ltd.

“We didn’t have much rain in March and no rain in April," Bhandari said. The delay and inconsistent blossoms caused some problems in certain areas and the flowers haven’t been converted to fruits.

Robusta for delivery in July fell 0.9% to $1,982 a tonne in London, while the arabica contract for the same month declined 0.2% to $1.2820 a pound in New York. Robusta has increased 3% this year, extending a 6.3% gain in 2012, while arabica prices have slumped 11% this year.

Robusta damage

The damage has been more in robusta plantations than in arabica, Bhandari said. In various pockets of Karnataka, there are reports that the robusta crop hasn’t been good because the blossom showers were not in time and there was a big gap between the first rain and the second rain, he said. Karnataka is the biggest grower of coffee in India, which exports about 70% of its total output.

“A white stem borer attack on plants after a spell of dry weather after blossoming last year will also lower yield," Ramesh Rajah, president of the Coffee Exporters Association of India, said by phone from Bangalore.

The white stem borer disease is still prevalent and we will have to live with it for now, he said. Exports are expected to drop over the next few months because the European economies have yet to recover and crop is less.

Shares drop

Shipments were little changed at 135,856 tonnes in the four months through April from a year earlier, according to the board. Exports included 74,584 tonnes of robusta and 33,283 tonnes of instant coffee, board data showed.

Shares of CCL Products Ltd, India’s biggest exporter, fell as much as 8% to 296.30, the most since 4 March, and Tata Coffee Ltd slipped as much as 1.9% to 1,500.05, the lowest since 29 April.

Robusta prices will likely continue to outperform arabica for the remainder of 2013, Macquarie analysts including Kona Haque and Chris Gadd said in a report dated 16 May. The bank forecasts robusta to average $2,025 a tonne in 2013-2014 and arabica at $1.485 a pound.

The robusta variety, used in instant coffee, is grown in Asia and parts of Africa. Arabica is produced mainly in Latin America and brewed by specialty companies including Starbucks.

The harvest in Vietnam may climb to the highest level in two years as rain this month ended drought in the main producing region. Production may advance 4.9% to 1.5 million tonnes in the 12 months starting October from 1.43 million tonnes a year earlier, according to Bloomberg survey this month. BLOOMBERG

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