Instant coffee demand seen boosting exports

The Indian coffee exports, for the current calendar year, have registered a marginal growth for the first time, on increase in shipments of robustas and the soluble or instant variety.

According to provisional numbers, total export permits issued by the State-run Coffee Board have exceeded the last year’s levels for the first time and were pegged at 2.159 lakh tonnes (lt) for the January 1 to August 19 period against 2.151 lt in the corresponding period last year.

However, the green bean coffee exports continue to trail the last year’s levels largely on account of a 33 per cent drop in Arabica shipments, despite the robustas registering a 21 per cent growth.

Green coffee trails

Also, the soluble coffee shipments measured in green bean equivalent stood at 60,842 tonnes, including the re-exports that grew 18 per cent for the period.

“We expect the shipments to maintain a small growth for the rest of the year,” said Ramesh Rajah, President of Coffee Exporters Association.

“The coffee held back by the growers anticipating better prices, would come out into the market over the next couple of months before the arrival of new crop,” he added.

Currency volatility

Rajah attributed the trailing trend in green coffee shipments to the declining production of the Arabicas.

Also, the Indian exporters are facing challenge from the devaluation of currencies by the top two coffee producing nations – Brazil and Vietnam, which has made their exports competitive.

The Brazilian Real and Vietnamese Dong have weakened by around 15 per cent against the dollar over the past year, while the Rupee has fallen by over 8 per cent.

Crop estimates

The Arabica harvest this year is likely to be advanced by a couple of weeks to September as the early rains have boosted the prospects for coffee.

The Board, in its initial estimates, pegged the crop size for 2015-16 crop year starting October at 3.55 lt – a growth of 8.75 per cent over previous year’s 3.27 lt.

Arabica crop size for 2015-16 is pegged at 1.10 lt – up 12.55 per cent over 2014-15’s final estimate of 97,700 tonnes.

Robusta crop size is estimated to expand to 2.45 lt, a growth of 7 per cent over previous year.

Export markets

C Rajendra Prasad, Chairman and Managing Director of CCL Products Ltd, the country’s largest instant coffee exporter said demand continues to be strong both from traditional markets such as Russia and Europe and even from the new geographies such as the United States.

CCL Products, which exports to about 56 countries, has so far shipped about 24,741 tonnes of instant coffees in the current calendar year. Tata Coffee has exported about 10,207 tonnes, while Nestle with 8895 tonnes were the other large instant coffee exporters.

Italy has been the largest buyer of Indian coffee at 55,378 tonnes, so far, followed by Germany at 20,537 tonnes and Russian Federation at 14,526 tonnes.

Source : Business Line