Coffee prices spiral on Arabica shortage ; Tight supply concerns, as also macro factors like spurt in consumption and volatility in dollar-rupee prices, have led to spiralling of coffee prices, specially Arabica variety, according to Coffee Board sources.Industry sources said the price of Arabica is currently ruling at around $3.3 per pound or $6.5 per kg on international markets which is 40 per cent more than same time last year.
Global supply has tightened with traditional coffee producing countries like Columbia and Brazil reporting drop in coffee production, which, in turn, led to escalation in coffee prices across the globe, officials said. They pointed out that against last coffee season’s production of 131-134 million bags, Columbia, largest coffee producer, this time has reported production of around 120 million bags.
Furthermore, what has led to rise in coffee prices, they said, is even carryover stocks of previous coffee seasons have been exhausted leading to demand-supply mismatch. Compounding the problem was heavy rains towards end on 2010 which delayed arrival of new crop into the markets.
Pointing out it was usual for prices to perk up during November-December months, they observed that once new crop arrives this month, currently tickling into auction markets, prices will stablise and reach normalcy. Now that the rains have abated harvesting of Arabic crop is currently on and once these reach auction house, prices too will taper. Likewise, for other crops like Robusta and plantation varities, too prices are reasonably attractive.
Owing to climate changes Arabica coffee production in the country took a hit. As against estimated output of 3.08 lakh tonne, revised figures stood at 2.99 lakh tonne, they said, adding rains in November too led to some crop going unsuitable for picking. Observing that India is not traditionally high coffee consuming country (we consume just about one fourth of production), high price of coffee has had no visible impact on consumption in domestic market. “There is no price elasticity for coffee in the country” as those for whom it is a habit do not mind slight rise in price, lower middle class any way consume only tea.” For the latest updates PRESS CTR + D or visit Stock Market news Today
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