BANGALORE : Indian coffee exporters and growers haven’t been able to benefit from the recent rally in Arabica prices, especially if one goes by the daily weighted average (DWA) prices tracked by the International Coffee Organisation (ICO).
The DWA for Arabica, which had perked up to 161.17 cents a pound on Monday last, reached a 52-week high of 161.24 cents but closed the week to October 23 at 155.24 cents.
However, the price-rise has perplexed traders locally. “One can’t fathom reasons for this spike in Arabica prices as it is not matched by requisite availability of stocks. In India, for instance, there is no Arabica for sale with only 10,000-15,000 tonnes of Robusta as inventory. We are waiting for new crop arrivals,” said a prominent coffee grower.
A leading coffee curer agreed saying that with supply tightness persisting, many Indian roasters (mostly the smaller ones) are forced to use Robusta as the main/primary raw material. Indian exporters say that the global demand-supply scenario for coffee is extremely tight. India is predominantly a Robusta producer, which accounts for 68% of total coffee output.
The ICO-monthly composite price (which is based on the daily prices of Colombian Mild Arabicas, other Arabica milds, Brazilian naturals and Robustas) had peaked way back in February 2008 touching an all-time high of 138.82 cents per pound but crashed to 103.07 cents per pound last December on the back of the global economic crisis. ICO has pegged global production at 128.8 million bags in 2008-09, while total consumption for 2008 was around 130 million bags.
Source : The Economic Times