Coffee Exports From India May Drop 15% on European Crisis, Low Inventory.

Coffee exports from India, Asia’s third-biggest grower, may decline as much as 15 percent this year as inventories fall and the European credit crisis curbs demand, an exporters’ group said today.

Shipments will drop from a record 346,850 metric tons in 2011, Ramesh Rajah, president of the Coffee Exporters Association of India, said by phone from Bangalore. Domestic stockpiles have fallen after exporters boosted shipments in December to benefit from a decline in the rupee, he said.

Lower exports from India may help stem a decline in robusta coffee futures in London, which have slumped 32 percent since reaching a three-year high of $2,672 per ton on March 18. Weak demand and higher global supplies may spur a sharper decline in arabica futures, which lost 5.7 percent in 2011.

“The economic conditions in Europe are not looking good,” Rajah said. “Italy, which is our largest buyer, is having problems. Greece, another major buyer, is also in trouble.”

Economies in the euro region will contract 0.2 percent in 2012 from 1.6 percent growth last year, according to the median of 21 economist estimates compiled by Bloomberg. India exports around 70 percent of its total coffee output mainly to Europe.

“None of the buyers want to carry inventories and everybody is in the wait and watch mode,” Rajah said. “Arabica coffee prices may remain around current levels, while robusta may drop 10 percent by March on a higher crop globally.”

Global Supplies

Global robusta production will outpace demand by 2.5 million bags this season, according to Macquarie Group Ltd. Output in Vietnam, the biggest exporter of beans used in instant drinks and espressos, will rise 9 percent to 21.25 million bags weighing 60 kilograms (132 pounds) this season, according to a Bloomberg News survey conducted last month.

Arabica coffee for March delivery jumped 1.2 percent to settle at $2.2685 a pound on ICE Futures U.S. in New York on Dec. 30. Robusta coffee for delivery in March gained 0.2 percent to $1,810 a ton on NYSE Liffe in London on Dec. 30.

India’s arabica exports climbed 6.9 percent to 54,103 tons last year, while robusta shipments increased 24.6 percent to 193,175 tons, the Coffee Board of India said today.

Exports were valued at $1.05 billion in 2011 compared with $634 million a year earlier, the data from the board showed.

India’s coffee output may total 320,000 tons this crop year compared with a government estimate of a record 322,250 tons, Rajah said. Production was 302,000 tons last year, according to the board.

“The new coffee crop is just trickling in and will pick up pace by mid January or February,” Rajah said. Unseasonal rains in December delayed the new crop arrivals, he said.

Inventories are almost negligible this year compared to 40,000 tons carried over into the 2011, he said.

Source : bloomberg.com