Coffee prices may rise on exports

Domestic arabica and robusta coffee prices are seen higher in the week ahead due to firm demand from exporters, tight supplies and cues from international markets, traders said.

In overseas markets, coffee prices are likely to be firm in the next few days due to supply concerns in Vietnam and forecast of lower-than-estimated output in Brazil, analysts said.

Vietnam is the world's largest producer of robusta coffee, while Brazil is the biggest producer and exporter of arabica coffee globally.

Overseas coffee markets are seen firm, as traders expect Brazil's output to be lower than previous estimates due to unfavourable weather, analysts said.

Also, low supplies in Vietnam because of holding back of stocks by farmers for getting higher returns is likely to push prices, they said.

In Vietnam, there are concerns that output may be lower due to unfavourable dry weather in some growing regions, a Mumbai-based analyst said.

"Overall trend is firm, but market may witness bouts of profit booking," said Avinash Raheja, senior vice president, Commtrendz Risk Management services. March arabica contract on Intercontinental Exchange US Futures may trade in the $1.4450-$1.5050 (Rs 57-60) a pound range in the week ahead, Raheja said.

In the next few sessions, March contract on London International Financial Futures Exchange is likely to get support at $2,165 (85,777) a tonne and face resistance at $2,295 (90,928), analysts said.

Monday, ICE March arabica contract ended at $1.4790 (Rs 58.59) a pound, up 70 points on speculative buying.

March coffee contract on LIFFE ended at $2,210 (Rs 87,560), down $15 on profit taking.

Domestic markets
Coffee prices in domestic markets may move up in the next few days due to tight supplies and good demand from exporters, said PJ Suresh Babu, proprietor, Chaitanya Coffee.

Raw arabica parchment is currently quoted at Rs 5,100 per 50 kg, up Rs 100-150 from last week, Babu said.

At present, raw robusta cherry prices are in the range of Rs 2,300 -2,325 per 50 kg, up Rs 150-200 from the previous week.

"Prices in both the varieties are expected to rise by nearly Rs 50 in the coming few days," Babu said.

Trends in overseas coffee futures will also impact Indian prices, he said.

"Despite the continuous rise in prices, planters are still holding back their produce, as they are expecting them to move up further, which has resulted in tight supplies," Babu said.

Also, labour problems in some estates in Karnataka are leading to a supply crunch, he said.