USDA semi-annual GAIN Report on India forecasts Indian coffee production for MY 2016/17 at 5.1 million 60-kg bags, with Arabica production estimated at 1.4 million 60-kg bags, and Robusta production estimated at 3.7 million 60-kg bags. MY 2016/17 production levels are expected to be lower from the previous year’s estimate.
While Karnataka’s coffee production areas experienced normal levels of rainfall during early 2016, this region also experienced an extended period of hot and dry weather prior to and during the southwest monsoon season (Jun-Sep), resulting in lower yields.
Although many Robusta growers were able to irrigate their bushes on a one-time basis, they were generally unable to consistently irrigate due to limited water availability.
To date, this dry spell has continued during the northeast monsoon (Oct-Dec) in the three major coffee growing states of Karnataka, Tamil Nadu, and Kerala, and is expected to negatively affect yields.
The Indian Ministry of Commerce estimates an 8-percent coffee production decline in 2016/17 from the previous MY due to poor precipitation and high temperatures during flowering.
Trade sources report that India’s overall crop will be reduced by 10-15 percent. For MY 2016/17, the Coffee Board of India estimates production at 5.3 million 60-kg bags (320,000 MT) in its post-blossom (pre-monsoon) forecast.
Arabica production is estimated downward by 3 percent (100,000 MT), while Robusta is also estimated lower by 10 percent (220,000 MT) from the previous year and will principally affect Karnataka-based producers. For MY 2015/16 crop, the Board revised its final estimate (Mar-Apr) to 5.8 million 60 kg bags (348,000 Mt comprising 103,500 Mt of Arabica and 244,500 MT of Robusta).
Post revised the MY 2015/16 production estimate to reflect the Board’s final estimate.
Lower demand reduces domestic consumption forecast
FAS forecast MY 2016/17 Indian coffee consumption at 1.1 million 60 kg bags (68,000 MT), a reduction of 100,000 60 kg bags from last year. Trade sources indicate lower demand for both instant/soluble, and roast and ground coffee segments.
Trade sources cite that instant/soluble manufactures are altering the percentage of coffee in blends to match consumer tastes and preferences, and maintain economic viability. A large percentage of the crop continues to be exported with limited availability for consumption.
Trade sources further indicate that while the ratio of roast and ground coffee consumption has traditionally been higher, the share of instant/soluble coffee has increased in recent years, especially in northern India, and will continue to increase in MY 2016/17.
Exports continue to remain strong due to steady demand
Indian coffee continues to remain competitive in global markets and demand remains strong in the traditional markets of Italy, Germany, and Belgium.
Provisional export data by the Coffee Board of India indicate that exports of Robusta cherry and re-exports of instant/soluble coffee in 2016 are higher over last year.
Farm-gate prices in Karnataka for Arabica have risen by 18 percent, while Robusta prices have risen by 31 percent since January 2016. Indian prices have tracked with global prices for both varietals, which have also surged since January with reports of expected lower production in other major coffee producing countries.
