Coffee Traders Hold On To Exports, Await Global Price Rise.

Following the recent slump in international prices, coffee growers and traders in India are adopting a ‘wait and watch’ policy, expecting a price rise after the monsoon.

“Coffee prices in the international bourses have witnessed substantial downward correction in the last two weeks. Post-correction, Indian planters are less inclined to sell their produce to international buyers and want to wait till the post-monsoon period,” said Ramesh Rajah, president, Coffee Exporters Association.

Arabica prices in the international market have dropped by 26 per cent to $2.3 per pound in the past few days from $2.9 per pound a month before on the ICE Exchange. Similarly, robusta prices have corrected by 10 per cent to $2,570 per tonne in Liffe Futures in London from $2,700 per tonne.

Industry experts said the downward price revision was attributed to pulling out of US pension funds from the commodity market and higher supply from Brazil.

“Exports in the first four months of this year has seen a significant rise. However, this will slow down in the wake up week price level in the international market,” Rajah added.

India’s coffee exports rose 46.4 per cent to 142,509 tonnes, during January-April on the back of strong demand from international buyers. While arabica exports jumped 47 per cent to 30,745 tonne in the first four months, robusta shipments surged 58.4 per cent to 77,978 tonne during the same period.

Rajah said Indian exporters will go slow on exports due to the ongoing harvesting season in Brazil. A section of coffee growers echoed similar sentiments. However, they said India will be least affected in such a scenario.

“Prices of arabica and robusta have seen significant correction in the recent past. However, Indian planters are less affected, as more than 80 per cent of arabica and 60 per cent of robusta have already been trans-shipped during the first four months this year,” said Sahadev Balakrishna, chairman of Karnataka Planters Association.

Balakrishna said despite price correction in the international market, domestic prices were unlikely to be revised drastically in the near term. About price expectation in the post-monsoon period, he said prices would see an upward trend from the first week of June.

“Normally, price revision in international bourses start from June onwards, as Brazil goes through winter during this period. Depending on the possibility of frost in the coffee growing regions of Brazil, future prices of this commodity will be determined.”

A Hyderabad-based trader said the recent price correction was overdue because the rise was not supported by fundamentals and driven by hedge fund speculation. “We will rather wait for the price movement in coffee than entering into an export contract now,” he said.

Source : Sify.com