Following the recent surge in coffee prices and rising transportation costs, foreign buyers have started to resist rising bean prices, exporters said. As a result, Indian exporters fear their buyers will turn to cheaper origin arabicas from the Central American region.
âWe are seeing some resistance from buyers in the Middle East to high prices for arabica,â said Ramesh Rajah, president of the Coffee Exporters Association.
âIt’s not just that coffee prices are on the rise, even logistics costs have been on the rise for some time now. It’s a double whammy for buyers, âsaid Rajah, adding that there would be some impact on Arabica exports for the 2021-22 season, as roasters may prefer to replace Indian Arabicas with origins. less expensive.
âWe are seeing a shift from India to other origins such as Honduras and Peru, especially in the medium and large roaster segment,â Rajah said.
However, the smaller roaster, who will be reluctant to change, is reluctant to place orders due to the higher prices. They hope prices will drop once arrivals increase in India, he added.
Ranked among other sweet, Indian arabicas have a market premium over New York terminal prices and are compared to Colombian and Guatemalan varieties.
Prices at record levels
Rajah said Indian arabica prices are at record highs, following the global trend and at least 30% above previous highs. Arabica prices have been at their highest for several years, with the frost impacting Brazilian supplies. In India, prolonged monsoon rains are affecting the size of the crop, which growers estimate to be down by around 30 percent. Exporters see agricultural production between 60,000 and 70,000 tonnes this year.
Arabica exports in the current calendar year, January 1 to date, amounted to 48,250 tonnes out of total shipments of 3.59 lakh tonnes. Recently, the USDA India Post fixed Indian exports for the 2021-22 season at 3.41 lakh tonnes.
The USDA Post expects export demand to remain strong, but trade sources say current prices are preventing international buyers from placing larger orders.
“The arrivals of new crops from December should help control prices and orders are expected to increase, but there could be a slight reduction (3-4%) in green bean exports as higher transport costs push up. buyers to consider sourcing their coffee from other sources, such as Uganda, âthe Post said.
Trade sources say domestic and international coffee prices will remain high as rising transportation costs (due to shipping delays) persist for another 6 to 12 months. Trade sources say the cost of shipping a container to European destinations has increased sevenfold from last year.
âThere is also a higher frequency of cancellations by carriers when reserving space on ships, and there are substantial delays in transit times,â the Post said.