India’s coffee exports are set to take a hit in the April-June quarter as orders from the largest buyer Italy, which is battling a severe outbreak of novel coronavirus, have come down considerably over the past few days.
Italy accounts for over a fifth of India’s coffee shipments.
“Order booking has slowed down and exporters are somehow trying to execute the existing orders. The impact will be felt in the April-June quarter,” said Ramesh Rajah, President of the Coffee Exporters Association.
Italy is in the grip of a severe crisis as normal life has been thrown out of gear after the dreaded coronavirus has spread rapidly across the country over past couple of weeks claiming thousands of lives.
In addition to the slowdown in orders, concerns on the logistics front is also seen impacting the shipments. The availability of containers is also going to a concern going ahead. “Shipping agencies have indicated that there could be a shortage of containers due to the disruption of business in China, from where a lot of containers come,” Rajah said.
Also, some exporters have indicated that they are facing delays in payments from buyers in Italy as banks in that country are not functioning at full capacity, he said.
Uncertainty in Jordan
Further, exporters have also faced issues from other markets in West Asia and North Africa. “Jordan has asked the Indian exporters to delay their shipments by a few weeks till we get to know the exact situation,” Rajah said. Jordan is among the top 10 buyers of Indian coffees.
However, Germany, the second largest market for Indian coffees, has not reacted. “Maybe after a couple of weeks, we may get more information from the Germans,” Rajah said.
As a result of the coronavirus crisis, the buying has slowed down triggering concerns among the growers, who have held back their produce. The slowdown in exports is happening at this time of the year, when shipments normally peak.
“There’s not much buying taking place as exporters are going slow. They are having some issues with shipping coffees as importers are asking them to hold on their shipments. We will have to wait and see how things pan out,” said Jeffry Rebello, a large grower in Sakleshpur, who is trying to sell his produce.
Rajah said as exporters are hesitant to take orders and have also slowed down their purchases, there could be some impact on the farm gate prices, which had seen an upward trend in recent months. Arabica parchment prices are currently ruling around ₹9,500-10,000 levels per 50-kg bag, while Arabica cherry prices are hovering around ₹3,900-4,000 levels. Robusta parchment prices are around ₹6,450-6,900, while Robusta cherry prices are around ₹3,100-3,200 levels.
While prices of Arabicas could see a marginal dip as bulk of the produce has been sold by growers, the impact on Robusta parchment would be the most, Rajah said. “In the long term, the impact depends on how the virus issue continues,” he said.
Exports were sluggish in the current calendar till March 18 due to the delayed harvest. Shipments, including re-exports, were down at 85,167 tonnes between January 1 and March 18 as against 91,293 tonnes in the corresponding period last year. Exports during current financial year till March 18 stood lower at $726.52 million as against $836 million in 2018-19. India exports about two-thirds of its coffee production.