"The higher value because of the gain in the global market has made up for the drop in volume," said Ramesh Rajah, president of the Coffee Exporters Association. Prices on the worldwide market surged due to a reduced crop outlook in major producing countries such as Brazil due to severe rain.
According to Rajah, India's coffee exports are likely to increase by 10% year on year in value terms over the next two quarters due to a move to mid-premium coffee from expensive premium-quality coffee amid firm international prices.
On Friday, the New York exchange priced the May contract of Arabica coffee at 195.90 cents per pound (354.84 per kg), while the same contract of Robusta coffee was offered at $2,442 per tonne (200.63 per kg). Rajah expects Arabica coffee prices on the New York exchange to be around 200 cents per pound, and Robusta coffee prices on the London exchange to be around $2,300 per tonne, due to a likely shortfall in supply in major producing countries such as Brazil and Vietnam as the El Nino weather phenomenon disrupts monsoon rainfall.
Brazil is the world's leading coffee producer, followed by Vietnam and Colombia, with India contributing roughly 2.5-3.0% to the global market. India is a raw coffee importer and an instant coffee exporter. Coffee exports for the fiscal year ended March achieved a record high for the second straight year, reaching $1.126 billion, exceeding the commerce ministry's aim of $1.088 billion.
"Exports are expected to be on par with the previous fiscal year in value terms," said Ajoy Thipaiah, chairman of the United Planters Association of South India's Coffee Committee. "However, the volume of exports may remain low." Coffee exports fell 3.6% in volume to 398,000 tonne in FY23 from 413,000 tonne in FY22, according to Coffee Board of India data.
According to Thipaiah, exports increased due to a decrease in shipping costs, which had increased seven-fold during covid in 2021 and immediately following covid in 2022. Shipping costs per container have dropped to pre-covid levels of $100,000-150,000, down from $700,000-750,000. Most medium-level coffee exporters, who were unable to export due to rising freight costs, are encouraged by this.
Indian coffee is a niche market valued by countries such as Italy, Germany, and Russia. Higher realization has also been related to the increase in exports. According to KG Jagadeesha, secretary and CEO of India Coffee Board, per unit realization for Indian coffee was 22% higher in the previous fiscal year, at 226,000 per tonne, compared to 184,000 a tonne in 2021-22 (April-March).
Prices and coffee production in India will determine exports in 2023-24 (April-March). Globally, prices are reasonable. However, delayed blossom showers in large estates in Kerala, Tamil Nadu, and Karnataka may severely reduce India's coffee production this season, raising concerns about export volumes, according to Jagadeesha.
