Indian coffee growers are experiencing a surge in robusta coffee prices, which have reached a record high, bringing them on par with arabica prices due to increased global demand and supply issues in Vietnam, the largest producer of robustas. This rise in prices is attributed to weather-related production disruptions in Vietnam and a global uptrend in robusta prices. As a result, farmgate prices for both arabica and robusta varieties in India are now similar, with robusta parchment prices increasing by 27% and robusta cherry by 16% since late December.
The premiums for Indian robustas have significantly risen, with robusta parchment AB commanding a premium of $700-750 per tonne over London terminal prices, and robusta cherry AB at $350-400. While Indian arabica plantation A has a marginal premium over New York terminal prices, arabica cherry ABs are at a slight discount. Growers, benefiting from the higher yields and lower production costs of robustas compared to arabicas, are holding onto their robusta stocks in anticipation of further price increases, despite some impact on robusta output due to unseasonal rains and labor shortages during the harvest.
The Coffee Board of India estimates the 2023-24 coffee crop at 3.74 lakh tonnes, with robusta making up the majority. The current high prices are encouraging for growers, allowing them to recover losses from previous years and are expected to sustain in the near term until the Brazilian harvest begins in May-June. Exporters and growers are advised to sell their produce in a staggered manner to maximize benefits without risking price drops, as the market awaits a potential production recovery in Vietnam and inventory buildup in consuming countries.
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