Explained: Why Are Robusta Coffee Prices Touching All-Time Highs?

Despite a slight dip in volumes, Indian coffee shipments set a new record, marking the third consecutive year of growth.

Madikeri: In recent times, the global coffee market has witnessed an unprecedented surge in Robusta coffee prices, propelling India's coffee exports to touch new highs in value terms for the financial year ending March 2024. 

Despite a slight dip in volumes, Indian coffee shipments set a new record, marking the third consecutive year of growth. In this article, The Kodagu Express delves into the factors behind this remarkable trend and its implications for Kodagu and India’s coffee sector.

How are supply issues driving Robusta prices to three-decade highs?

One of the primary drivers behind the soaring Robusta prices is the supply crunch in major producing countries such as Vietnam and Brazil. This scarcity has favored India, where Robusta constitutes the predominant variety. Consequently, the per unit realization for Indian exporters surged by about a fifth during the 2023-24 fiscal year compared to the previous year. In an article published in The Hindu Business Line, K G Jagadeesha, Secretary and CEO of the Coffee Board, attributes this export boost to a combination of factors including favorable market prices and disruptions in supply chains.

Why are Export Values rising for Indian coffee?

In dollar terms, Indian coffee exports witnessed a notable increase of 12.5%, reaching $1.26 billion in the 2023-24 fiscal year, up from $1.12 billion in the previous year. Similarly, in rupee terms, exports rose by 16% to ₹10,491 crore. Despite a marginal decline in quantity by 2.5%, the export sector demonstrated resilience, leveraging the surging prices to achieve record-breaking revenues.

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What drives India's coffee export market and market demand?:

India exports over two-thirds of its coffee production, with robusta being the dominant variety. In an article published in  The Hindu Business Line, Ramesh Rajah, President of the Coffee Exporters Association,  highlights that the increase in export value is primarily driven by robustas. The demand remains robust, with shipments in the latter part of the financial year outperforming earlier quarters. Major destinations for Indian coffee include Italy, Germany, Russia, and the UAE, reflecting the global appeal of Indian coffee beans.

How is market prices and premiums:

The recent weeks have seen robusta farmgate prices in India surpassing those of arabicas, aligning with the global uptrend. Robusta parchment prices are commanding ₹14,000-14,500 per 50 kg bag, while robusta cherry, the widely-produced variety, is priced at ₹8,500-8,950. Arabica cherry and parchment prices range between ₹8,000-14,300, respectively. Indian robusta parchment AB enjoys a premium of $700-750 per tonne over London terminal prices, indicating the quality and demand for Indian coffee in international markets.

What Are the Future Projections for the Coffee Industry?

Looking ahead, the Coffee Board estimates a robust crop size of 3.74 lakh tonnes for the crop year 2023-24, reflecting optimism in the sector's growth trajectory. With favorable market conditions and sustained demand, India's coffee industry is poised for further expansion and consolidation of its position as a key player in the global coffee market.

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