By Swansy Afonso
February 05, 2013
Coffee
exports from India, Asia’s third-biggest supplier, may decline for a second
straight year as an economic slowdown in Europe cuts demand and as damage from
pest attacks reduces the harvest.
Shipments
may drop below 300,000 metric tons this year from 310,886 tons in 2012, Ramesh
Rajah, president of the Coffee Exporters Association of India, said by phone
from Bangalore. Exports fell 9.4 percent last year, the first annual drop in
three years, according to data from the Coffee Board of India.
A
drop in Indian supplies may help limit a 34 percent slump in arabica prices in
the past year in New York and cut costs for Starbucks Corp. and Nestle SA.
Stockpiles monitored by ICE Futures U.S. reached 2.63 million bags of 60
kilograms each on Feb. 1, the highest since March 2010. Slowdowns in Italy,
Russia and Spain, India’s main buyers, curbed demand for the commodity brewed
by specialty coffee makers.
“The
order book is thinner this year because the economies of the main markets
aren’t faring well and buyers are aggressively searching for cheaper coffee,”
Rajah said. “Arabica exports from India will be lower as prices have come down
sharply and shippers don’t want to sell at these prices.”
The
euro-area economy shrank 0.1 percent in the third quarter after a 0.2 percent
contraction in the three previous months. Gross domestic product probably fell
another 0.4 percent from October to December and will stagnate in the first
quarter of 2013, according to a Bloomberg survey. Europe accounted for 38.3
percent of the global green coffee consumption in 2012, according to the United
States Department of Agriculture.
Pest Attacks
Arabica
is grown mainly in Latin America and brewed by specialty companies including
Starbucks. Robusta beans, used in instant coffee, are harvested in Asia and
parts of Africa. India produces both the varieties.
The
arabica contract for March delivery rose 0.5 percent to $1.451 a pound in New
York by 4:54 p.m. in Mumbai yesterday, while robusta for delivery in the same
month gained 0.9 percent to $2,054 a ton in London.
The
coffee crop in India may decline this year because of pest attacks caused by
dry weather during the flowering period and rains during the harvest, Rajah
said. Output may drop to 310,000 tons in the year started Oct. 1 from a record
of 314,000 tons a year earlier, he said.
“The
weather was very unusual last year,” he said. “Late rains has led to the delay
in arrival of the new crop by three- four weeks and the crop is just coming
into the market.”
Pest
attacks like the white stem borer due to dry weather after blossoming reduced
productivity, he said.
India
shipped 21,557 tons of coffee in January, comprising of 6,689 tons of arabica,
6,257 tons of robusta beans and 8,611 tons of instant coffee, data from the
board showed.
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To contact the
reporter on this story: Swansy Afonso in Mumbai at safonso2@bloomberg.net
To contact the editor responsible for
this story: James Poole at jpoole4@bloomberg.net