Coffee Exports From India Seen Climbing as Record Crop Looms

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Coffee shipments from India may increase the most in four years as prospects for a record crop in Asia’s third-largest producer spur farmers to liquidate inventory.

Exports will rise as much as 10 percent in the year through March 2016 from 286,516 metric tons last year, said Ramesh Rajah, president of the Coffee Exporters Association of India. That would be the biggest gain since 2011-2012, when sales jumped 11 percent to 333,181 tons, data from the state-run Coffee Board show.

Rising sales from India to mostly Europe and Russia will add to a global surplus forecast by Societe Generale SA and weigh on robusta prices in London. Supplies from the South Asian nation may help bridge a shortfall in shipments from Vietnam, where farmers are hoarding the most beans in at least five years on speculation prices will rally further. Robusta accounts for about 70 percent of India’s exports.

“With a larger crop expected next season, the small farmers will keep selling” as they can’t bear the storing and logistic costs, Rajah said by phone from Bengaluru on July 14. “The crop was low in 2014-15 and farmers held back and the prices went up.”

Robusta futures last month rose 9.3 percent, the most since February 2014, and traded 1 percent lower at $1,688 a ton on ICE Futures Europe on Friday. Arabica, which advanced 5 percent in June in New York, was down 0.6 percent at $1.2805 a pound. Societe Generale predicts a surplus of 905,000 bags of 60 kilograms each this year.

Monsoon Boost

Production in India will rise 8.7 percent to a record 355,600 tons in 2015-16, the board estimates. Timely monsoon rains have boosted crop prospects, according to Anil Kumar Bhandari, a member of the state-run agency.

“We are heading for a very good crop,” Bhandari said by phone from Bengaluru on July 13. “The coffee-growing belt in Karnataka and Kerala has got adequate rains.”

Exports rose 12 percent to 102,850 tons between April 1 and July 13 from the same period a year earlier, provisional data from the board show. Italy, Germany and Russia were among the top buyers of Indian coffee.