India’s coffee exports have declined 20% since the beginning of 2015 as high prices have made shipments uncompetitive in the global market.

The Arabica coffee shipments plummeted by as much as 50%, pulling down the overall coffee exports of India.

Widespread rains in the largest Arabica-producing nation Brazil have led to a 14% decline in global Arabica prices in the past two months.

The May futures at ICE New York closed at $1.48 per pound on Monday , down 3% from the previous close.

“At the current domestic prices, the exports are not viable. Arabica from Brazil and other origins is much cheaper,” said MP Devaiah, general manager of Allanasons, a major exporter.

The raw coffee prices of Arabi ca parchment in India are about . 10,300 per 50 kg.` Between January 1 and February 23, the Arabica parchment exports fell to 6,617 tonne, down by as much as 50% compared to the year-ago period. The Robusta cherry , which accounts for a major share of coffee exports from India, fell 15% to 16,012 tonne during the period of January-February .

According to local growers, the Arabica crop has been lower than expected due to poor weather conditions and the attack of white stem borer pest. “The harvest is over and the output should be between 55,000 and 60,000 tonne,” said K Kurian, chairman of Karnataka Planters’ Association.

The growers earlier predicted 65,000 to 70,000 tonne of Arabica while the estimate of Coffee Board was much higher at 1,05,000 tonne.

But exporters said the drop in production is not as much as it is made out to be.

“The growers are holding the stock in anticipation of better prices. As a result, exporters are unable to enter new commitments,” said Ramesh Rajah, president of Coffee Exporters’ Association of India.

However, he added since the Robusta crop is predicted to be good, the current decline in exports could be made good in the next quarter.

Coffee Board’s forecast for Robusta is 2.39 lakh tonne and the growers’ estimate is only slightly less.

The production in Vietnam, the top producer of Robusta, is expected to be around 29 million bags (each bag of 60 kg), slightly lower than in the previous year.Therefore, Vietnam may not be able to lower the prices of what it has to offer globally.

source: http://www.economictimes.indiatimes.com / The Times of India / ET Home> Industry> Cons. Products> Food / by KrishnaKumar PK / TNN / February 25th, 2015