India coffee prices take a hit on weak demand in global market

Written by Jaishankar Jayaramiah | Bangalore | Updated: Jun 30 2009, 04:29am hrs
Coffee growers and stockists in India have started feeling the heat in the past 2-3 weeks as demand for coffee declined in global market leading fall in prices in the domestic market too.

According to the International Coffee Organisation (ICO) daily price indicator, coffee prices in the international market tumbled to 112.19 US cents per lb on June 24 from a whopping 131.24 cent per lb on June 1. Colombian mild Arabica declined to 187.96 cents from 229.25 cents, while Robustas price tumbled to 67.77 from 77.62 cents during the same period.

"There was tight supply for Colombian milds in the international market that pushed up prices till a month ago. Now, Colomian milds have started flowing into the market that created an impact in prices both at international and domestic markets," said CP Chandan, partner of Cothas Coffee, a Bangalore-based coffee retailer.

Currently, the Arabica plantation A grade declined to Rs 210-212 a kg from Rs 225 recorded three weeks ago in the Indian market. However, there was no much change in Robusta prices as it has managed to hover at around Rs 82-84 a kg for the past one month, trade sources said.

The international trend has reflected in the domestic market, which witnessed poor coffee transaction in the past three weeks. Buyers had taken a 'wait-and-watch' stand as the situation in the international market was not in favour of buyers, trade sources added. The dull international trend reflected in the weekly coffee auction conducted by the Indian Coffee Trade Association (ICTA) in Bangalore on Thursday.

Requesting anonymity, an official attached to J Thomas & Co, one among the two auctioneers of ICTA, said: "Due to the continuous drop in the international coffee prices, all varieties on offer received less enquiry from domestic trade as well as from exporters."

In the ICTA auction, Arabica Plantation PB, A & C grades remained unsold as sellers' price indication was higher than the buyers' interest. Arabica Cherry PB grade prices declined by Rs 100 per 50 kg compared to the last week's auction.

Auctioneer J Thomas & Co offered a total quantity of 4,16,967 kg for sale through auction including 1,96,704 kgs of Arabica and 2,20,263 kgs of Robusta. But only 38,000 kgs of coffee sold in the auction, the official said.

The current price for Arabica Plantation B stood at Rs 7,600 per 50-kg bag, BBB at Rs 4,500, Robusta Parchment PB at Rs 5,825, AA at Rs 6,750, C at Rs 5,050 and BBB at Rs 3,500.

Following negative trend in the international market, average unit value of coffee exported from India also declined to Rs 1,07,601 per tonne during April-June 25 as compared to Rs 1,09,229 per tonne in the same period a year ago.