Coffee Output in India Seen Missing Estimate on Rains, Pests

India, Asia’s third-largest coffee exporter, may miss the forecast for a record crop next year after the highest monsoon rainfall in almost two decades damaged beans and increased pest attacks.

Production may total about 317,000 metric tons next season, 30,000 tons less than the all-time high of 347,000 tons forecast by the Coffee Board of India in July, said Anil Kumar Bhandari, a member of the state-run agency. The harvest was 318,200 tons in the year that began on Oct. 1, 2012, board data showed.

Reduced supplies from India, where robusta accounts for 70 percent of the output, may help stem a decline in prices of the bitter-tasting beans used by Nestle SA (NESN) in instant drinks. Global production including arabica variety will exceed demand for a fourth straight year and inventories will climb to the highest since 2009, the U.S. Department of Agriculture estimates.

“Cherry dropping in robusta has been an issue because of excessive rains,” Bhandari said by phone from Bangalore yesterday. “There have been heavy pest attacks of the white stem borer on arabica crop. The white stem borer has been there for three to four years, and each year, about 5 percent of the crop gets destroyed.”

The main growing areas in Karnataka, which produces about 70 percent of India’s output, received as much as 29 percent more monsoon rains between June 1 and Aug. 20, according to the India Meteorological Department. Rainfall in the first two months of the July-September monsoon season, the main source of irrigation for India’s 235 million farmers, was the highest since 1994, according to the bureau.

Wet Foot

“Firstly, in April, the showers failed miserably and high temperatures affected the crop,” said Nishant Gurjer, chairman of the Karnataka Planters’ Association. “From June onward, we have received more rains than in the last 20 years.”

The association expects production to decline to 280,000 tons as excessive soil moisture has led to wet foot disease damaging many plants, he said.

Robusta for delivery in November fell 1 percent to $1,811 a ton on NYSE Liffe in London at 3:36 p.m. in Mumbai, while the arabica contract for December gained 0.4 percent to $1.1765 a pound in New York. Robusta has fallen 5.9 percent this year, while arabica futures have retreated 18 percent.

The robusta variety is grown in Asia and parts of Africa. Arabica is produced mainly in Latin America and brewed by specialty companies including Starbucks.

Rupee Benefit

Exports from India will pick up from September as buyers in North America, Japan and Eastern Europe start purchases and shipments this year may equal sales in 2012, Bhandari said. Exports fell 4.1 percent to 217,492 tons in the seven months through July from a year earlier, according to the board. Exports included 116,732 tons of robusta and 43,206 tons of arabica, board data showed.

“There may be a small spurt in exports in the next three months because the dollar strength will enable exporters to offer a good price to buyers,” said Gurjer. “For the full year, exports will be flat.”

India’s rupee plunged to a record today after minutes from a U.S. Federal Reserve meeting showed that the central bank is getting closer to reducing stimulus that has fueled demand for emerging-market assets. The currency has slumped 16 percent in the past six months, benefiting exports of everything from sugar to rice and tea.

To contact the reporter on this story: Swansy Afonso in Mumbai at safonso2@bloomberg.net

To contact the editor responsible for this story: Jake Lloyd-Smith at jlloydsmith@bloomberg.net

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