Indian coffee exports have shown a significant drop so far this year on low demand said to have been caused by the current global economic slowdown.
Shipments from the country from January 1 to April 13 dropped by 13,912 tonnes to 63,184 tonnes, including 13,891 tonnes of instant coffee, from 77,096 tonnes, including 20,513 tonnes of instant coffee, in the corresponding period last year.
Industry sources attributed the decline to the current economic turmoil. They said that the drop was mainly in the high-cost instant coffee segment following a reported shift from the high cost to low-cost products. However, there are signs of recovery, especially because of the limited new season supplies, they told Business Line.
According to the International Coffee Organisation, “problems in the availability of supplies of Colombian Milds have supported firm prices for this group of coffee, with the indicator price for this group reaching high levels in March and early April”.
Supply, demand balance
So far, ICO sources said, world demand remains steady despite the ongoing world economic crisis, while tight supplies of Colombian and, to a lesser extent, Central American origins, could make the supply/demand balance even more fragile. “This is particularly worrying since stocks are at their lowest recorded levels in many exporting countries and the Brazilian 2009/10 crop is expected to be lower”, they pointed out.
In March, prices of Colombian Milds rose to their highest level in the last 13 months, while those of the other three groups of coffee fell. The fall in prices, and in particular those of Brazilian Naturals and Robustas, exerted downward pressure on the monthly average of the ICO composite indicator price, which fell from 107.60 US cents a lb in February to 105.87 US cents a lb, a reduction of 1.6 per cent. Prices of other milds remained fairly firm, despite a fall of 0.7 per cent, they said.
Estimates of the current crop in Colombia have been reduced as a result of climatic problems and the implementation of a coffee tree regeneration programme, lending support to the market. Furthermore, fertiliser use has been reduced because of high costs. Heavy rainfall and cost constraints caused by high fertiliser prices have also affected production in Central America.
Outlook
In terms of the fundamentals of the coffee market as a whole, ICO said, the outlook remains broadly unchanged. The reduction in the Colombian and Central American crops is contributing to the creation of a fragile supply/demand balance. This fragile balance is particularly worrying at a time when stocks are at their lowest levels and Brazilian production in the crop year 2009-10 is expected to be lower, since this is the off-year in the biennial Arabica production cycle. Furthermore, there is no indication, at present, of any significant fall in demand due to the world economic crisis.
Exports
Exports by all exporting countries in February 2009 totalled 8.4 million bags, bringing the cumulative total for coffee year 2008-09 to 39.4 million bags compared to 37.8 million bags for the same period in 2007-08, an increase of 5.7 per cent. This increase is attributable mainly to the increase in exports of Brazilian Naturals and, to a lesser extent, robustas and other milds, they said.
Source : Business Line