Euro woes may cut India coffee exports 15%

Coffee exports from India, Asia's third-biggest grower, may decline as much as 15 per cent this year as inventories fall and the European credit crisis curbs demand, an exporters' group said yesterday. Shipments will drop from a record 346,850 metric tons in 2011, Ramesh Rajah, president of the Coffee Exporters Association of India, said by phone from Bengaluru. Domestic stockpiles have fallen after exporters boosted shipments in Dec-ember to benefit from a decline in the rupee, he said. Lower exports from India may help stem a decline in robusta coffee futures in London, which have slumped 32 per cent since reaching a three-year high of $2,672 per ton on March 18. Weak demand and higher global supplies may spur a sharper decline in arabica futures, which lost 5.7 per cent in 2011. "The economic conditions in Europe are not looking good," Rajah said. "Italy, which is our largest buyer, is having problems. Greece, another major buyer, is also in trouble." Economies in the euro region will contract 0.2 per cent in 2012 from 1.6 per cent growth last year, according to the median of 21 economist estimates compiled by Bloomberg. India exports around 70 per cent of its total coffee output mainly to Europe. "None of the buyers want to carry inventories and everybody is in the wait and watch mode," Rajah said. "Arabica coffee prices may remain around current levels, while robusta may drop 10 per cent by March on a higher crop globally." Global robusta production will outpace demand by 2.5 million bags this season, according to Macquarie Group Ltd. Output in Vietnam, the biggest exporter of beans used in instant drinks and espressos, will rise 9 per cent to 21.25 million bags weighing 60 kilograms (132 pounds) this season, according to a Bloomberg News survey.