Plunge in global coffee prices has got Indian coffee growers and traders worried

The worries of the Indian coffee-growers are likely to increase due to anticipation of ample global supply of coffee, adding to the woes of Indian coffee farmers who are already reeling under the impact of low prices, rising cost of cultivation and an erratic weather pattern.

Coffee growers fear that the prevailing bearish trend in prices, witnessed for the past 3-4 years, would extend into the new crop year beginning October as production is set to peak in major producing countries such as Brazil, Vietnam and India.

While the US Department of Agriculture (USDA) recently forecast that supplies would increase by 11.4 million bags of 60 kg each in 2018-19 to a record 171.2 million bags, the International coffee Organisation (ICO) expects the current year’s production to increase by 1.2 per cent at 159.66 million bags on higher production in eight of the ten large coffee producing countries.

Global coffee prices, after peaking in 2014, have been volatile in the past couple of years. The prices in India are mainly driven by the movement on the London and New York terminals.

Farm-gate prices of the Arabica parchment, which ruled at around Rs 9,500-9,700 per 50 kg bag in January 2017, have now dropped to around Rs 6,400-6,500 levels. The decline in rupee against the dollar in recent months has not helped stabilise farm-gate prices. However, the cost of cultivation is on the rise, driven primarily by revised wages and increase in fuel costs.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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