Coffee prices have hit the upper circuit in the international market at a time when farmers in India are busy in coffee harvest, hoping that the crop will fetch good prices for the second year running.
The monthly average price of coffee, arabica in particular, climbed by 4.43% to 124.96 cent per pound in December last year compared to 119.67 cent November, according to the International Coffee Organisation (ICO). Prices in December 2009 prices were up by 21.24% compared to 103.07 cent per pound recorded during the same month last year.
?This monthly average for December 2009 is the highest recorded since the outbreak of the world economic crisis in September 2008,? Nestor Osorio, executive director of ICO, said in his latest report.
Coffee prices have been increasing at alarming levels from January 1, an official attached to J Thomas & Co, an official auctioneer engaged by Indian Coffee Trade Association (ICTA), said. Global coffee prices surged to 130.35 cent per pound on January 13 compared to 124.63 cent reported ten days ago. ?New season 2009/10 crop arabica pantation coffees on offer received good support from the domestic trade as well,? he said.
As per the weekly report of J Thomas & Co, arabica plantation B and C grade prices were higher by Rs 50–150 per 50-kg bag during the last week’s auction conducted by the ICTA.
The sudden surge in prices in the global market has come as a sweet surprise to Indian coffee farmers who are harvesting new crops, said a Coorg-based coffee planter. Arabica coffee harvest in India starts in November and peaks in January while robusta harvest continues through March starting from January.
Sensing good margins, Indian coffee exporters have increased their shipping from January 1. Coffee exports from India almost trebled to 3,459 tonne in the first week of 2010 compared to a meagre 1,256 tonne exported in the same period last year.
Value for Indian coffee at the international market also increased to Rs 1,20,497 per tonne from Rs 1,15,286 during the period, according to statistics available with the government-run Coffee Board. With the gap between demand and supply widening month-on-month, coffee prices are expected to touch record levels in 2010.
?Coffee supplies are likely to remain tight in 2010 as a result of low production and problems in quality coffee beans because of poor weather conditions during harvesting. Moreover, despite the global economic slump, coffee consumption has remained buoyant and would keep prices firm in future as well. Since production is expected to be lower than consumption, stocks will continue to be drawn down from already low levels,? Osorio said.
Coffee harvesting for the 2009-10 crop year is almost over in Brazil, the world’s top coffee producer, while it began in November in India, the sixth largest producer. Coffee production declined in Brazil in 2009-10. ?World coffee supplies may therefore be limited in 2010 bearing in mind that opening stocks are at low levels and adverse weather conditions could affect the quality of crops,? ICO has said.
