With a month is left for active coffee harvest in India, Arabica prices have started moving upwards. Demand in overseas markets and supply crunch in the domestic market were the two main reasons that pushed up the Arabica prices, trade sources said.
The scorching price scenario was reflected in the coffee auction conducted by Indian Coffee Trade Association (ICTA) on Thursday in Bangalore, where Arabica Plantation PB and A grade prices were higher by Rs 50 – Rs 100 per 50-kg bag compared to last week prices, an auctioneer requesting anonymity said.
According to analysis by the state-owned Coffee Board, ICE Arabica coffee futures ended higher on Thursday on signs that supplies are tightening and the speculation that the dollar will slump, lifting demand for the US commodities. December Arabica settled up 195 points at $ 1.3760 a pound, with March gaining 195 points to $1.4155.
In the ICTA weekly auction, Robusta prices mostly remained steady due to weak demand.
In the current year till September 25, India exported 42,326 tonne of Arabica coffee, up 20% from 35,297 tonne exported in the same period a year ago, but Robusta exports increased by a meager 1.7% to 91,880 tonne in the same period.
Starting from the end of October, Indian planters will start harvesting Arabica. The harvest would be active in November-December. Even after fresh crop hitting the market at the end of this year the coffee prices will stay firm, the market sources said. Indian coffee prices depend on the crop output in Brazil, the world’s largest producer of coffee. Although crop year 2008-09 is an year of high production in Brazil’s two-year cycle, the production prospects for crop year 2009/10 will be much lower, according to CONAB, the official agency responsible for agricultural estimates in Brazil.
The Indian traders are expected stock the new Arabica to fetch premium prices during the next season.
