Coffee exports likely to slip in Q2.

KOCHI: Coffee exporters say the second quarter will be worse than the first as far as shipments are concerned.

Slowdown in demand, holiday in chief buyer Italy, and higher prices of Indian robusta will squeeze orders in the next three months, forcing exporters to lose out from the fall in rupee.

A larger crop from Indonesia, the third-biggest robusta producer, is expected to push prices further down in the global market. Coffee exports in the first quarter was not as bad as expected. The shipments were down by 9% to 1,04,233 tonne in the three months ended June 2012.

The value saw a marginal decline at Rs 1,560 crore, primarily due to a higher unit value for coffee. Though arabica prices crashed, robusta was more or less stable. Robusta variety accounts for majority of Indian exports. Exporters feel a combination of factors will cause a setback to Indian exports in the next quarter.

"Demand is weak from Europe. Big buying is not there and it has become difficult to get orders. Indian robusta is ruling higher in the global market now, causing the orders to go to countries with cheaper crops," said Ramesh Rajah, president of Coffee Exporters Association of India.

The crop from Indonesia has started arriving. Coffee crop in Indonesia is predicted to touch 8-9 million bags (each bag of 60 kg), a jump of over 30%, marginally pulling down robusta prices. Vietnam, the biggest robusta producer, already had a bumper output, a lion's share of which has been sold out.

India has not been able to take advantage of the decline in rupee because of the higher robusta prices in the domestic market , triggered by a shortfall in production.

Source : economictimes.indiatimes.com