Drop in Brazilian supply can provide a boost to Indian coffee exports, says industry official

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With volume uptick unlikely for the second year in a row in coffee consumption in the global market due to Corona led restrictions, Indian coffee exporters are expecting lower supply from the main producing country Brazil somewhat salvaging the situation for them in 2021. Speaking with indoasiancommodities, Ramesh Rajah, President, Coffee Exporters Association of India said the exports outlook for this year again appears to be flat but some surprising elements can favour the domestic traders.  

“The calendar year hasn’t really begun on a very promising note and the shipments in the first three months has been low. However, due to dry weather conditions in Brazil, there would be supply constraints and we can benefit from this. In fact, the news of lower supply from Brazil has already resulted in a small spike in global coffee prices,” Rajah said.

The Coffee Board earlier had given its estimate of 3.42 lakh tonnes coffee production in 2020-21 (starting October or post-monsoon estimate), which is higher than final estimate for the previous fiscal. Coffee production in India (mainly concentrated in Karnataka, Kerala, and Tamil Nadu) is mostly export centric with 75 percent of the output led by Robusta varieties shipped to the international market. 

Western Europe has been the mainstay of Indian coffee exports with countries like Italy and Germany being the main buyers. “However, after Corona hit last year and the new wave returned, the out of the home coffee consumption has considerably dropped in the region which has affected Indian coffee exports,” Rajah added. 

Ramesh Rajah, President, Coffee Exporters Association of India

Last year, the volume of coffee exports had come down from 3.26 lakh tonnes in 2019-20 to 3.12 lakh tonnes. However, in value terms, Indian exporters had managed to earn more with price rise in the global market due to supply pressure (in the later part of the year) after Covid first phase had stabilised in most of the countries.  According to Coffee Board estimates, the per unit value of Indian coffee shipped internationally had gone up from Rs 1.59 lakh tonne to Rs 1.75 lakh tonne.

With an uncertain outlook in terms of demand from Europe, the Indian coffee exporters are now pinning their hopes in getting some new orders if the supply from Brazil goes slow. In a report issued in February, Rabobank had projected a possible supply shortage of 2.6 million 60 kg bags in 2021-22 in the global coffee market with shrinkage in output of Brazil due to below average rainfall.

Ritwik Sinha chased trucks in his childhood, without realising logistics would become a deep love for him. Inherently a television man, he now spends long hours interviewing key people for our very popular YouTube channel. Podcasts are next on his list. In his free time, Ritwik is either looking for a warehouse filled with commodities or hitching a ride on a cold truck – all of which yields great stories!

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