Drop in prices hurts realisations even as shipments see 18% growth in March quarter
Bengaluru :
Sluggish economic conditions in part of Europe and West Asia is triggering demand for the low-priced coffees such as the robusta cherry and instant varieties as consumers in these regions are seen shifting to the cheaper beverage, exporter said.
The trend is reflected in the increased shipments of these varieties from India over the past three months.
Higher shipments
“We are noticing a trend that buyers in Europe and the Gulf Countries are seen buying more of cheaper coffees than in the past,” said Ramesh Rajah, President of the Coffee Exporters Association.
The shift in preference in the Gulf nations could be influenced by the drop in oil prices.
Permits rise
Total coffee permits issued by the Coffee Board for the January 1-March 24 period were up around 18 per cent at 90,274 tonnes (76,567 tonnes in corresponding last year), primarily driven by a surge in shipments of robusta cherry and the instant variety.
Permits issued for robusta cherry were up 32 per cent at 40,618 tonnes (30,756 tonnes), while for instant coffee shipments including that of re-exports, the permits issued were up 13 per cent at 25,299 tonnes (22,416 tonnes) for the period.
For the robusta parchment or the washed robusta, which command a premium in the world market, the permits issued dropped around 23 per cent to 5,822 tonnes (7,595 tonnes).
Changing preferences
However, the premium variety arabica parchment saw an increase in demand at 15,099 tonnes (11,837 tonnes).
Coffee Board officials also attributed the increase in demand for robusta cherry and instant coffee to some extent to the shift in consumer preferences to cheaper varieties in markets such as Europe.
An early harvest of robustas has also contributed to the increase in shipments as more coffee was available for exporters with growers, especially the smaller ones, preferring to sell their produce as prices continued to remain volatile.
An official with a global trading house attributed the jump in the January-March quarter shipments to an early robusta crop this year and also to the front-loading of sales by the producers, wherein growers sold off their produce as soon as it was ready to sell a few weeks ago.
But now, the market arrivals have slowed down as growers – especially the larger ones – are beginning to hold back their produce, the official said.
The harvest of robusta is complete and the growers, especially the Arabica producers are looking forward the blossom showers in the week ahead.
Export realisations
Though the March quarter shipments have been good, the earnings are likely to be under pressure due to lower prices.
The per tonne realisation has dropped considerably to ₹1,55,077 in March quarter as compared to ₹1,77,660 in the corresponding period last year.
Exporters are a bit sceptical of sustaining the growth trend in shipments in the year ahead.
“The near term order books are good, but there is slackness in the medium to long-term,” Rajah said.
The Coffee Board has pegged the 2015-16 crop at 3.5 lakh tonnes – a seven per cent increase over the previous season’s 3.27 lakh tonnes.
source: http://www.thehindubusinessline.com / Business Line / Home> Economy> AgriBusiness / by Vishwanath Kulkarni / Bengaluru – March 28th, 2016
