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Indian Exports Are Unaffected By The Global Coffee Price Decline

From January 1 to November 4, 2022, shipments increased by 9% to 353,226 tonnes. In 2017, a record 394,393 tonnes were exported.

Since the majority of the beverage stock has already been dispatched to customers, the recent drop in coffee prices globally is not anticipated to have an effect on Indian coffee exports. Exporters are currently awaiting new arrivals from the nation's ongoing coffee harvest in order to enter into new export contracts because the majority of shipments have already been made at higher prices than those in effect throughout the year.

From January 1 through November 4, exports increased by 9%, reaching 353,226 tonnes in 2022 compared to the previous year. In 2017, a record 394,393 tonnes were exported. Brazil and Vietnam, the two biggest producers of coffee, have changed their predictions for the crop due to various weather circumstances. Due to the lack of rainfall and the effects of the severe frost from last year, Brazil's food supply agency Conab reduced its forecast for the country's 2021–22 (October–September) coffee production to 50.38 million bags (each bag weighing 60 kg) in September, down from 53.43 million bags in its May estimate.

However, regular rains and fine sunshine in the next weeks led to the forecast of promising prospects for the upcoming harvest, which brought down the cost of futures contracts. Benchmark ICE futures prices are at $1.75 per pound, down 15 to 20%. The cost per pound was around $2.12 two months ago. "Indian exporters have exported the majority of their cargo, having signed export contracts while prices were high. After the Indian crop is finished in the early part of the following year, they will sign new contracts.

Additionally, N Sathappan, director of SLN Coffee, noted that Indian coffee prices had not decreased as much as world prices, adding that even the current level of global pricing was not detrimental to exports. Vietnam, the world's largest producer of robusta coffee and the second-largest producer of coffee overall, has increased exports, which has decreased the price of robusta beans globally. According to reports, Vietnam exported 1.73 million tonnes of coffee in 2021–22, which is a four-year high. In just two months, prices for Robusta futures have dropped by more than 16%, to $1,869 per tonne.

This has happened at a time when worries about a reduced crop in 2022–2023 have been raised due to the high prices of inorganic fertilisers, which boosted the usage of organic manure for the coffee crop in Vietnam. However, Sathappan observed, "enough rainfall and excellent pricing can persuade the producers to choose a superior crop in Vietnam. According to a projection by the United States Department of Agriculture on worldwide coffee production, in 2022–2023, production would increase by 7.8 million bags to 175 million bags. It estimated 167 million bags of consumption.

The harvest of coffee in India has begun and is anticipated to pick up steam during the coming two months. The Coffee Board forecasts a crop of 393,400 tonnes in 2022–2023, consisting of 277,000 tonnes of robusta and 116,400 tonnes of arabica, which is 15% more than the current crop. However, considering the heavy rainfall in the primary coffee-growing regions of Karnataka, the state with the highest production of coffee in the nation, producers are not optimistic about attaining that amount. "The robusta harvest may come near to the anticipated total, while the arabica crop will be far lower than expected." The production at this point may be 20 to 35% less. But we won't get a good picture till January," according to N Ramanathan, the Karnataka Planters' Association head.

He claims that due to the white stem borer pest's increased attacks over the previous ten years, many planters have switched from arabica to robusta. The robusta is stronger and more pest-resistant. To stop the disease from spreading, growers were employing temporary measures like covering the infected plant in polythene. Although robusta costs less than arabica, Ramanathan noted that robusta requires less upkeep.

Even though the crop may fall short of the Coffee Board's objective, Indian coffee exporters are anticipating a robust harvest. We have surpassed pre-COVID levels in 2022 and had a strong year for coffee exports. We anticipate costs in 2023 to be comparable to those in 2019. Ramesh Rajah, president of the Coffee Exporters Association, stated that the carryover stock is low and that exports may only continue after new inventories arrive.

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