Continuous rainfall in Vietnam, the largest producer of robusta coffee, has kindled hopes of a fall in prices which could boost exports of the commodity from India that have been declining due to sluggish demand and high robusta bean prices.

A large chunk of India's coffee exports comprises robusta coffee variety, the prices of which have been rising in the past few months on concerns of a lower crop in Vietnam and Brazil, two major producers that set the price in the world market.

The ICE London November robusta coffee futures fell 1 per cent to $1,909 per tonne on Friday last week, ending seven consecutive sessions of gains.

Many Indian exporters said rains at this stage may not help make good damage suffered by the coffee crop in Vietnam due to drought. "Vietnam is expected to end up with less than 25 million bags (each bag of 60 kg), about 10 per cent less than in the previous year. Harvest begins in November," said a senior executive of NKG Jayanti Coffee, a major exporter.

Traders said global futures may rise another $200 in the coming months given that the next robusta crop in Brazil, Indonesia and India is likely to be lower.

   "In India the robusta prices have climbed to Rs 130 per kg from Rs 110 per kg in a few weeks. If it goes above Rs 140 per kg, there could be consumer resistance," said a leading coffee broker, who did not wish to be identified.

India's coffee exports increased nearly 17 per cent from January 1to September 9 to 265,860 tonnes from that a year ago. In the earlier months, exports grew 20 per cent over the previous year's figures.

"In India, most of the stock has been sold out. Maybe 15 per cent of the stock is left. Moreover, the European buying is sporadic. As a result export trend will be slack for next three months," said Ramesh Rajah, president of Coffee Exporters Association of India.

The stock has thinned despite a bumper crop last year. Only the large growers are left with some stocks, Rajah said.

India's coffee growers have revised their estimate of fall in the next robusta output from more than 20 per cent to 15 per cent since the monsoon has been good. Coffee Board has forecast in its post blossom estimate that the robusta crop will be down 10 per cent to 2.2 lakh tonnes.

Sources :economictimes.indiatimes.com