Demand for coffee may remain strong in 2023-2024 – while prices are high
The trend of coffee prices seems upwards due to which international buyers are placing only very limited orders. They are not convinced to place large orders at these prices. The USDA (United States Department of Agriculture) Post said prices of Indian coffee are trade-off at decade-high rates, compelled by a global surge in international prices due to stock issues.
The Green bean prices for “Arabica Parchment” and “Robusta Cherry” have increased by 9% and 24% respectively, since the beginning of the year in October 2022. Both varieties are trading well above the International Coffee Organization indicator prices.
It is known from the local office of USDA that India’s coffee exports for the year 2023-24 at the beginning of October are set to rise by 2% to 6.3 million bags of 60 kg each (about 0.38 Million Tonnes) on strong export prospects. Its latest projections expect the export demand for Indian coffees to remain strong throughout 2023-24.
Increasing demand for Robusta due to lower prices
The President of the Coffee Exporters Association, Mr. Ramesh Rajah said that “The strong demand for Indian Robusta, especially the Robusta Cherry is seen driving the projected growth”. He further added “We are seeing a good demand for the lower priced Robusta, while we don’t see a big increase in Arabica shipments.” The impact of weak economic conditions is seen triggering demand for the lower priced Robusta.
For the current season 2022-2023, period of October-May, shipments stood at over 0.238 Million Tonnes, about 10% lesser when compared with the same period last year’s 0.265 Million Tonnes, as per the Coffee Board data.
The USDA Post forecasts that in the marketing year 2023-24 coffee production may remain at 5.8 Million bags of 60 kg each comprising 73.8k Tonnes of Arabica Parchment and 0.274 Million Tonnes of Robusta Cherry. The forecast for 2023-24 is seen as lower than the current year’s estimate of 6.25 Million bags.
Impact of Monsoon & lower demand in the domestic market
The shortfall in pre-monsoon rains, March-May are predictable to impact yields negatively as fruit setting drops significantly, especially for the Arabica variety in the major growing regions of India,” USDA Post said.
This leads to reduced supply & high prices. On the other hand, India’s domestic consumption is forecast to decline marginally to 77k Tonnes as a result of rising input costs including that of raw coffee beans. Post further said that carryover stocks will remain limited due to higher export volume, USDA Post said.