India’s Coffee Output May Hit Two-Decade Low After Dry Spell

  • Output may fall 30-35% in the next harvest: United Planters
  • Long dry spell in March and April damaged coffee flowering

India, Asia’s third-largest coffee producer, may harvest a smaller crop than forecast after dry weather hurt flowering.

Output will decline about 30 percent to 35 percent in the harvest starting Oct. 1 from a record 350,000 metric tons a year earlier, according to A.L.R.M. Nagappan, chairman of the coffee committee of the United Planters’ Association of Southern India. That would mean a crop of 245,000 to 227,500 tons, the lowest since 1996-97, data from the state-run Coffee Board show. The board estimates the 2016-17 crop at 320,000 tons.

A smaller harvest will shrink Indian exports, supporting prices amid concern El Nino-induced dry weather will cut output in Vietnam, the world’s biggest grower of robusta coffee beans. Robusta, used to make instant coffee, capped a fifth monthly rise in June in the longest such run since 2014.

“We didn’t have rains at all during blossom time in March and April,” said Nagappan. “The rains that are happening now are not going to help. It’s not going to help the already set in crop.”

Damaged Flowers

The peninsular region of the country experienced an unusually long dry spell in March and April with rainfall being about 70 percent less than normal, according to the India Meteorological Department. That stunted bean development and the return of monsoon rains in June failed to improve crop prospects.

“The damage that has been caused because of the dry spell in March and April can not be rectified,” said Nishant Gurjer, a member and past chairman of the Karnataka Planters Association. “Once the flower is damaged because of lack of moisture, nothing can reverse that. ”

Karnataka state, which accounts for about 70 percent of India’s total coffee crop, got 421 millimeters (17 inches) of rain since June 1, equaling the 50-year average, data from meteorological department show.

Indian exports are set to slowdown in the second half as stockpiles dwindle and farmers hold back beans in anticipation of higher prices, said Ramesh Rajah, president of the Coffee Exporters Association of India.

Robusta futures, which reached a 16-month high on July 15, rose as much as 1.2 percent, the most in a week, to $1,808 a ton on ICE Futures Europe on Tuesday. India’s coffee exports climbed 19 percent to 223,928 tons in Jan. 1-July 20, from 188,814 tons a year earlier, according to the board.

“The need-based selling has mostly taken place,” Rajah said. “Now it’s discretionary selling, so farmers will probably slowdown. We are expecting a bigger demand for robusta.”

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