Coffee prices are at a 13-month high in international markets, after rain hit world’s largest-producer Brazil, lifting share prices of Indian coffee companies on Wednesday.

Tata Coffee was the biggest gainer at 6.21 percent on the BSE at around 2.30 p.m., followed by Tata Global Beverages and Bombay Burmah Trading Corporation.

“In Brazil it is raining too much in the Arabica areas, and this is definitely causing quality concerns,” Reuters had quoted a European physical coffee trader as saying last Friday.

An Indian coffee grower said heavy rainfall is bound to impact harvesting of coffee crop.

“Rains at the time of harvest can damage the crop as the beans will fall off. As a result, Arabica prices have been looking up in the last few days. Also, one cannot wish away the effect of drought in Brazil earlier in the year. Hence, it may not turn out to be a bumper crop as projected but not a bad crop either,” the Economic Times quoted coffee grower Anil Bhandari as saying.

On June 17, the US Department of Agriculture (USDA) had forecast world coffee production for 2016/17 to rise by 2.4 million bags from the previous year to 155.7 million bags (60 kg per bag). The estimate was based on Arabica output in Brazil increasing to about 60 percent of total production, neutralising lower Robusta production in the country, along with Vietnam, and Indonesia.

Arabica and Robusta are two main categories of coffee worldwide. The Arabica crop determines global coffee prices.

After factoring global consumption at 150.8 million bags, the USDA said exports from Indonesia, Vietnam, Brazil and India are likely to remain lower (than last year).

India had exported 3.20 tonnes of coffee in 2015-16, up 13.39 percent from the previous fiscal.

After from being the largest producer, Brazil is also the largest exporter of coffee.

source: http://www.ibtimes.co.in / International Business Times / Home> News> Companies /by S V Krishnamachari / June 22nd, 2016