Coffee production in India, the third-biggest grower in Asia, may reach a record next year as widespread rain in the main growing regions aids crop prospects, likely increasing shipments to buyers in Europe.
Output may total 300,000 to 305,000 metric tons in the year starting Oct. 1, up from 289,600 tons, Ramesh Rajah, president of the Coffee Exporters Association of India, said in a phone interview from Bangalore. The harvest may include 210,000 tons of robusta, used in instant coffee, compared with 195,000 tons this year, he said.
Record production in India, which exports nearly two-thirds of its output, may cool a 21 percent rally in robusta coffee prices in London amid a decline in global inventory of arabica variety. Arabica coffee had the biggest weekly gain since 2006 last week amid tight supplies and quality problems with the crop in Brazil, the world’s biggest grower.
“India will have a lot more coffee to export next season and I suspect it’s going to be difficult for robusta prices to sustain,” said Rajah. Robusta coffee for immediate delivery in London is trading at a discount to the futures market, he said.
Commerzbank AG echoed Rajah’s view in report last week. Arabica prices may drop to $1.45 a pound by the end of the year and robusta to $1,450 a ton after the “excessive increase” since the end of May, the bank said.
Robusta for September delivery advanced $20, or 1.3 percent, to $1,571 a ton on the Liffe Exchange on June 18. Arabica-coffee for September delivery climbed 2.7 percent to $1.621 a pound in New York, taking last week’s gain to 11 percent, the most since Jan. 6, 2006.
Excess Rain
The southern states of Karnataka and Kerala, which account for more than 90 percent of the India’s production, got normal or excess rainfall since the start of the annual monsoon season on June 1, according to the weather office.
Exports may jump at least 5 percent to 220,000 tons in the next season, Rajah said. India supplies to countries including Italy and Russia.
“Demand from Europe, by far our biggest market, has been slackening because of the economic crisis there,” Rajah said. “The contagion somehow has not hit Italy in a big way, and that is a big relief.”
Shipments jumped to 187,337 tons between Oct. 1 and June 16, 42 percent more than the 132,328 tons shipped a year earlier, the state-owned Coffee Board said on its website. Sales were worth $398 million, up from $306.6 million a year ago, it said.
India produced a record 301,200 tons of beans in the 2000- 2001 season, according to the board.
To contact the reporter on this story: Thomas Kutty Abraham in Mumbai at tabraham4@bloomberg.net.
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