 "Coffee prices may rise 15% on supply woes")
Coffee prices are likely to firm up in the second half of the current calendar year by an estimated 15 per cent, according to exporters. Arabica coffee futures gained this week to settle at 121 cents a pound for the September delivery, while robusta coffee futures are at $1,785 a tonne.
The supply worries owing to drought in growing countries like Vietnam (a major producer of robusta) and roya attack (a fungus attacking coffee beans) in Central American nations are likely to affect the production of coffee, resulting in firming up of prices.
"We expect both arabica and robusta prices to firm up at least in the second half of 2013. Although, fundamentally, Brazil is coming on with a very big 'off year' crop, there is a problem of roya. It will erode output," said Hameed Huq, managing director of Tata Coffee. "Low quality Arabica will be available, but for better quality Arabica beans, which come from Central American countries, there will be a tightening in the supply. Roya does not affect one year like a drought. It's a long-term problem."
Huq expects the supply of better quality arabica might be hit due to the roya attack. "Though it is very difficult to predict the movement of coffee prices, we can expect it to firm up 15-20 per cent to settle at around 150 cents per pound during the second half of 2013," he said.
According to the International Coffee Organisation, across Central America, bean production is expected to shrink 16 per cent in the growing season-October to September-compared to a year earlier. "On robusta, I see a firming trend later this year. There is much higher consumption of robusta than previously because of two things. Firstly, the change over among roasters to robusta and secondly, instant coffee is showing steady growth world over, which consumes lot of robusta," Huq said. "I can see robusta prices going up to $2,000 to $2,050 per tonne from the current levels of $1,780 per tonne later this year."
The robusta futures market prices started at $2,000 per tonne, picked up to $2,100 by August 2012 and thereafter steadily declined to close at $1,900 in December. The market was steady thereafter and firmed up to $2,100 by March 2013 on lower crop forecast due to drought conditions in Vietnam, which is the largest producer of the Robusta variety. India's coffee exports fell 4.45 per cent to 191,055 tonnes in the first six months of the current calendar year against 199,969 tonnes in the corresponding period last year due to weak global prices.
The supply worries owing to drought in growing countries like Vietnam (a major producer of robusta) and roya attack (a fungus attacking coffee beans) in Central American nations are likely to affect the production of coffee, resulting in firming up of prices.
"We expect both arabica and robusta prices to firm up at least in the second half of 2013. Although, fundamentally, Brazil is coming on with a very big 'off year' crop, there is a problem of roya. It will erode output," said Hameed Huq, managing director of Tata Coffee. "Low quality Arabica will be available, but for better quality Arabica beans, which come from Central American countries, there will be a tightening in the supply. Roya does not affect one year like a drought. It's a long-term problem."
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Tata Coffee largely exports robusta green beans and instant coffee. During 2012-13, it exported 4,831 tonnes of coffee against 5,735 tonnes in the previous year, a decline of 16 per cent.
Huq expects the supply of better quality arabica might be hit due to the roya attack. "Though it is very difficult to predict the movement of coffee prices, we can expect it to firm up 15-20 per cent to settle at around 150 cents per pound during the second half of 2013," he said.
According to the International Coffee Organisation, across Central America, bean production is expected to shrink 16 per cent in the growing season-October to September-compared to a year earlier. "On robusta, I see a firming trend later this year. There is much higher consumption of robusta than previously because of two things. Firstly, the change over among roasters to robusta and secondly, instant coffee is showing steady growth world over, which consumes lot of robusta," Huq said. "I can see robusta prices going up to $2,000 to $2,050 per tonne from the current levels of $1,780 per tonne later this year."
The robusta futures market prices started at $2,000 per tonne, picked up to $2,100 by August 2012 and thereafter steadily declined to close at $1,900 in December. The market was steady thereafter and firmed up to $2,100 by March 2013 on lower crop forecast due to drought conditions in Vietnam, which is the largest producer of the Robusta variety. India's coffee exports fell 4.45 per cent to 191,055 tonnes in the first six months of the current calendar year against 199,969 tonnes in the corresponding period last year due to weak global prices.