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Indian Robusta Parchment Coffee Fetches Premiums of Over USD 1,000 a Tonne

After a nearly two-year hiatus, premiums for Indian robusta parchment coffee have risen to over $1,000 per tonne over London terminal prices. This is primarily due to lower-than-expected robusta parchment production and growers holding back their produce in anticipation of higher prices.

Shivam Dwivedi
The standard premium for Indian robusta parchment ranges between $750 and $1,000 per tonne
The standard premium for Indian robusta parchment ranges between $750 and $1,000 per tonne

Price differentials for the niche Indian robusta parchment AB variety are currently hovering around $1,100-1,200 per tonne over LIFFE (London International Financial Futures and Options Exchange) terminal prices, while it is hovering around $375-400 per tonne for the robusta cherry variety.

"The standard premium for Indian robusta parchment ranges between $750 and $1,000 per tonne. In recent years, we have seen an unusual drop to absurdly low levels of $100-200, which was unjustifiable due to an excess of parchment. We are now back and have recovered to our previous levels. We are slightly above average, but growers are not selling. "A few committed trade houses are forced to cover," said Ramesh Rajah, President of the Coffee Exporters Association.

"We are not seeing that much demand and the orders are not that good," Rajah said of exports. Slower arrivals are being caused by growers sitting on the coffee. In February, Chikmagalur, Hassan, and Coorg should be flooded with coffee, but arrivals are low. "Some growers claim the crop is low," Rajah explained.

According to Coffee Board data, coffee shipments were 64,180 tonnes in January-February this year, down from 66,018 tonnes the previous year. "Shipments are slightly lower. Arrivals are sluggish. The offering premiums are obviously high, while the traded quantity is low. The market has priced India out. "There is less heavy buying and more need-based buying," Rajah said.

Farmgate prices for robusta parchment are currently hovering around Rs 10,800-11,000 per 50-kg bag, up from Rs 8,000-8,300 at the end of December. Similarly, robusta cherry prices are currently hovering around Rs 5,100-5,300 (compared to Rs 4,300-4,550 in December). Arabica parchment prices are currently hovering around Rs 15,800-16,000 (Rs 13,500-13,500), while Arabica cherry prices are hovering around Rs 7,700-8,000 (Rs 6,450-7,000).

Jeffry Rebello, President of the United Planters' Association of South India (UPASI), attributes the rise in coffee premiums to a combination of factors including a significant reduction in robusta parchment production, a weakening rupee, and a buoyant London and New York markets.

"Demand for robusta parchment is more or less constant, but this year there has been a significant reduction, resulting in higher premiums," Rebello said, adding that robusta production is down by 15-25 percent in most places due to unseasonal rains in January, a labour shortage during picking season, and other factors.

According to Mahesh Shashidhar, Chairman of the Karnataka Planters' Association, robusta output is down, which has caused prices to rise. The harvest is nearly complete, with more than 90% of growers finishing their pickings.

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