With merely a fortnight left for the 2007-08 season?s coffee harvest to begin, traders are in no mood to let go of their stocks. The reason: They anticipate better prices due to a projected decline in coffee production in India and Brazil.
Though the appreciating rupee against the US greenback did take some toll on the realisation value, industry sources said the volumes were primarily affected due to hoarding. Sources said the carry over stock from the last crop is estimated to be between 20,000 tonne and 25,000 tonne.
Anil Kumar Bandari, ex-president of United Planters? Association of Southern India (UPASI), said while the coffee region in Brazil witnessed drought in the July-September period, excessive rain during the north-east monsoon, damaged some crop in India. Due to these natural calamities, he said the estimated production in Brazil and India is expected to come down during the 2007-08 season, creating demand for coffee and lucrative prices at the global market. This has led the traders to hoard, he said.
In addition to it, traders have been holding onto their stocks, expecting higher prices on anticipated demand for coffee, during active winter from December to February, in major coffee drinking parts of the world.
According to the Coffee Board, India?s coffee exports till date in this year declined to 2,08,157 tonne from 2,36,534 tonne in the same period last year. In 2006, the country exported 2.44 lakh tonne but this year the export may see a marginal decline. Increase in domestic consumption is also a reason that has impacted the exports, Bhandari said.
According to Coffee Board?s post-monsoon estimates, India would witness a five-year high production in 2006-07 at 2.88 lakh tonne, comprising 99,700 tonne of Arabica and 1,88,300 tonne of Robusta. It was in 2001 that coffee production crossed over 3-lakh tonne.
The Coffee Board has projected that the production for 2007-08 season would be marginally higher at 2.91 lakh tonne. However, the Karnataka Planters? Association, at its recently held annual summit, said the Robusta coffee production would decline by around 10% in 2007-08.
