Coffee prices in India started declining in the last two weeks following low export demand and weak international prices.

The prices are tumbling as the Brazilian crop has started hitting the market, trade sources said. Brazil is the world?s top producer of coffee.

According to latest statement released by International Coffee Organisation (ICO), harvesting of the 2008 – 09 coffee crop in Brazil has begun later than the normal period following heavy rains in the last month. The Brazilian authorities have indicated an estimated total production of 45.5 million bags for the current crop year compared to 36 million bags in the last season.

According to revised estimation, world coffee production would touch close to 128 million bags, up from the earlier estimation of 125.5 million bags.

These scenarios have started dragging down prices at international levels that reflects in India too, an auctioneer in Bangalore said requesting anonymity.

Coffee prices at the international market, according to ICO indicator, declined to 131.20 cents per lb on July 17 from 142.99 cents per lb on July 1.

Even the coffees auctioned at Indian Coffee Trade Association (ICTA) on Thursday in Bangalore witnessed lower prices.

In a statement, coffee auctioneer J Thomas, said, ?All varieties of coffees on offer met selective enquiry. While Arabica Plantation PB, A & B grade sold at current price levels and were bought by the internal trade circle, C grade on offer remained unsold. Arabica Cherry PB & C price were lower by Rs 100 to Rs 200 per 50 kg. Robusta parchment coffees on offer remained unsold as seller?s price indication were higher than buyer?s interest.

However market sources said the current price decline would not continue in the coming months. As per the biennial crop cycle, the coffee crop for the next season 2009-10 in Brazil will be lower compared to the current year. Hence the traders in exporting countries would start storing the commodity for the next year that would again stabilize the prices in comming weeks. Moreover market sources said the rising consumption worldwide will keep the coffee prices hot in the coming years