News

Anala Rajkot

Jul 19, 2024

Rising Robusta Coffee Prices Present a Golden Opportunity for Indian Exporters

Rising Robusta Coffee Prices Present a Golden Opportunity for Indian Exporters

Surge in Robusta Prices

The global coffee market is witnessing significant shifts, particularly in the robusta segment. Supply issues in Vietnam and Indonesia, two major robusta coffee producers, are driving up prices. This situation presents a unique opportunity for Indian exporters to capitalize on the growing demand for robusta coffee.

Robusta coffee prices in India have been climbing in line with global trends. Vietnam, the largest producer, is facing supply challenges and pushing up robusta prices worldwide. In India, robusta cherry prices recently surpassed, marking a nearly 10% increase since early April and over 50% since January. On the global stage, robusta futures at the ICE have surged by over 60% year-to-date.

Growers' Market Behavior

According to the President of the Coffee Exporters Association, the price surge is primarily due to reduced availability from Vietnam. Additionally, European buyers are increasing demand ahead of the European Union Deforestation Regulations (EUDR) year-end deadline. The president also notes that some growers anticipate further price increases and are withholding their stock. He estimates that 70% of the coffee has been sold, with 30% still held by growers.
  • India's coffee exports have risen by 11% in 2024, reaching 0.253 million tonnes by July 11, compared to 0.228 million tonnes during the same period last year.
  • This growth is driven by robusta cherry and instant coffee demand.
  • Robusta cherry exports increased by 18% to 0.119 million tonnes, while instant coffee shipments, including re-exports, grew by over 11% to 0.083 million tonnes.

Opportunities for Indian Exporters

An official from Agrani Coffee and Commodities Ltd highlights the tight availability and high prices of robusta due to supply issues in Vietnam and Indonesia. He notes that this creates an opportunity for India to fill the gap. The active monsoon season is providing liquidity, encouraging growers to release more coffee amidst solid buyer demand.

BMI, a Fitch company, expects the coffee market to remain buoyant due to supply issues from critical producers like Vietnam and Brazil. Accumulating stocks may pose some challenges to price growth in the latter half of 2024. Monitoring rainfall and water reservoir levels in Vietnam ahead of the peak harvest season (November 2024 - February 2025) will be crucial.

Adequate replenishment is vital to prevent further production declines. The anticipated shift from El Nino to La Nina between August and October 2024 is expected to bring favourable rainfall levels to Southeast Asia. Looking further ahead, Brazil's coffee harvest is set to enter an off-cycle in MY2024/25, typically associated with reduced domestic production, which could further tighten the market.

Conclusion

The current supply constraints in major robusta-producing countries present a lucrative opportunity for Indian coffee exporters. With rising prices and increased demand, especially from Europe, India is well-positioned to expand its market share. Strategic management of exports and monitoring of global market conditions will be essential for maximizing this potential. Indian exporters should seize this moment to strengthen their presence in the global coffee market.
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