Sky-rocketing coffee prices and expected bumper crop in Brazil this season have dampened the buying interest in the Indian coffee market, dragging down the coffee sales in recent weeks.
The prices of both Arabica and Robusta ruled higher in the weekly auction conducted by Indian Coffee Trade Association (ICTA) on Thursday despite inadequate buying interests, said an official attached to the coffee auctioneer J Thomas & Company.
The prices of Arabica Cherry PB increased by Rs 200 to Rs 5,400 per 50-kg bag when compared to the prices in the last week?s auction while Arabica Cherry AB climbed to Rs 5,750 from Rs 5,650. Average price of Robusta Parchment increased to Rs 6,000 from Rs 5,800, ICTA sources said. Likewise, the prices of all varieties including Arabica Plantation PB and Robusta Cherry PB witnessed 3-5% higher than the prices in the last week?s auction.
The auctioneer J Thomas & Company brought 1, 71, 202 kgs of coffee including 104,559 kgs of Robusta while another auctioneer Forbes showcased 31, 883 kgs of beans including 14,437 kgs of Arabica for auction. But only 10-15% of the total quantum was sold due to dull buying interest, sources added.
In fact, the monthly average of International Coffee Organisation (ICO) composite indicator price increased to 138.82 cents per lb in February from 122.22 per lb in January. But the ICO indicator price tumbled to 126.55 cent per lb in April and again started moving up in the first week of May touching 131.20 cents per lb on May 21. Since then the ICO indicator price has been fluctuating at higher levels between 127-128 cents per lb.
?The exporters did not want to buy at higher levels. The market expects that the prices should come down as the ICO has said in its latest report that Brazil would witness a bumper crop during this harvest season that started in the first week of June,? said R Vasudevan of Mathura Coffee Works, who is also a buying member of ICTA.
According to CONAB, the official agency responsible for agricultural estimates in Brazil, the coffee production in Brazil would touch 45.5 million bags in the 2008-09 crop year, which will be 35% higher than the previous year that witnessed low production season for Arabica. The anticipated bumper crop in Brazil would comprise 34.7 million bags of Arabica and 10.8 million bags of Robusta.
However, planters and traders in India are hoarding stocks of around 30,000-40,000 tonne of Arabica beans as they anticipate the prices to further climb if Brazil witnesses heavy frost this season. In fact there is a high threat of frost that usually runs from the end of May to mid August in Brazil?s coffee growing region.