Indian shippers stare at threat of losing market share in northern Europe
Bengaluru, May 14:
Pricey Indian
Arabicas are staring at the risk of losing market share in key consuming
countries such as Germany, Switzerland and Benelux as roasters have
started switching over to Colombian varieties. Indian arabicas are
currently commanding a record premium of 70 cents per pound (lb) over
the New York terminal price, while the premium for Colombian coffee is
hovering around 10 cents/lb.
Trade sources attribute
the high premium to a lower crop and also to the demand triggered from a
section of exporters, who are short of washed arabicas. Also, the fact
that a section of medium and large growers are unwilling to sell their
produce anticipating higher prices is aiding the trend.
High premiums
While
the prices of arabicas on the New York terminal have dropped by about
40 per cent since October last year till now, local prices have not kept
pace with the global decline. New York prices, which ruled at a high of
around 227 cents per pound in October last year, are now hovering
around 135 cents per pound. Similarly, the farm-gate price of arabica
parchment, which ruled at around Rs. 12,500 per 50-kg bag is now hovering between Rs. 9,800 and Rs. 10,200, down 18-21 per cent.
“There
is no way the high premium on Indian coffee can be justified. Our
customers are switching over to the relatively cheaper Colombian milds,”
said an official heading the exports division at multinational firm in
Bengaluru. The firm sources coffee for the European roasters.
“Most
big roasters from Northern Europe have stopped buying and are shifting
to other cheaper origins. This has dented the demand mainly from
Germany, Switzerland, Benelux and Scandinavian countries,” said Ramesh
Rajah, President of Coffee Exporters Association. Europe accounts for
close to half of India’s annual coffee shipments.
Shipments down
The
trend is reflected in lower shipments, so far, in the current calendar
year. Arabica parchment shipments are down by 40 per cent at 18,328
tonnes during the January 1-May 13 period against 30,654 tonnes in the
corresponding a year ago. Similarly, arabica cherry shipments are down
25 per cent (see table). The increase in robusta shipments and surge in
imports for re-exports has minimised the impact on overall shipments,
down 7 per cent for the period.
Rajah said even the
growth in robusta shipments was not as per expectations, whereas
re-exports were likely to increase this year. “When domestic prices are
high, it is attractive to import for re-exports,” he said. Though some
demand exists from traditional buyers for arabica in West Asia at these
prices, they won’t be able to pick up the entire volume. Also, there’s
some buying in small volumes from Italy, he said.
Trade
sources said about 60-70 per cent of the Indian Arabicas has already
been traded and most of the shipments were likely to be completed before
the monsoon begins.
Post-monsoon estimates
The
timely arrival of pre-monsoon showers in the coffee growing regions has
brightened the prospects for the 2015-16 crop starting October. “We
expect Arabica output to be 20 per cent higher for 2015-16 over this
season,” said Rajah.
For the current season, the
Coffee Board – in its post-monsoon estimates – has pegged crop size at
3.31 lakh tonnes, some 8.7 per cent higher than last year’s final
estimate of 3.04 lakh tonnes. Arabica output is pegged at 99,600 tonnes,
while Robusta at 2.31 lakh tonnes.
Source: BusinessLine
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