Bigger coffee harvest likely to ease prices

The country's coffee crop, Asia's third-largest, may gain from rain in the main growing areas, raising prospects of a bigger harvest in the year starting October.

Plantations in parts of the southern Karnataka and Tamil Nadu states received rainfall for three days early this month, aiding flowering of the milder-tasting arabica beans, said GV Krishna Rau, chairman of the state-run Coffee Board.

"The rains are certainly going to be beneficial for the next crop,'' he said in an interview yesterday.

"Previously, we've had a record harvest when it rained in February.'' The rains led to dropping of beans in some plantations of robusta, a variety used in instant coffee, he said.

A bigger crop in India, which exports 80 per cent of its output, may help slow this year's 35 per cent gain in robusta coffee prices. The futures touched $2,625 a tonne today on London's Liffe exchange, the highest in almost 11 years.

India's coffee production may reach 262,000 tonnes in the year to September 2008, 10 per cent lower than the 291,000 tonnes forecast in July by the government, the board said on December 17. The crop totalled 288,000 tonnes in a year earlier.

Exports may total 210,000 tonnes in the year ending March 31, 16 per cent lower from a year earlier, Rau said. India exported 182,431 tonnes in the April 1-February 21 period, according to data on the board's website.

"We may see a decline in exports next year proportionate to the drop in output,'' Rau said. The board hasn't set a target for production, he said.

Growers weren't holding back any significant quantity of coffee from the harvest that ended in September because of the high prices of beans. Italy and Russia were among the buyers of Indian coffee in 2007.