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Arabica Coffee Prices Drop Globally Ahead of Harvest

Farmgate prices for raw coffee have begun to fall at the start of the new harvest season, in line with global trends. Global prices have fallen in recent weeks as a result of rising inflation, recessionary fears, and improved supply, among other factors.

Shivam Dwivedi
Current prices for arabica parchment and arabica cherry are higher than the same period last year
Current prices for arabica parchment and arabica cherry are higher than the same period last year

Farmgate prices of arabica parchment in Karnataka, which had reached an all-time high of Rs 17,000 per 50-kg bag a few weeks ago, have now dropped to around Rs 14,000-14,500 levels for the new crop, a drop of around 15%. Fly picking, or the harvest of early ripened beans, has begun in parts of Kodagu and Chikkamagalur, two important arabica growing regions.

Similarly, arabica cherry prices have fallen to around Rs 6,500-7,000 from around Rs 9,000-9,250 at the end of August, representing a 25% drop.

However, the current prices for arabica parchment and arabica cherry are higher than the same period last year. At the end of October last year, arabica parchment prices were around Rs 12,600-12,800 per 50-kg bag, while arabica cherry prices were around Rs 5,400-5,600 per bag.

ICE December arabica futures have dropped from around $2.28 per pound in early October to less than $1.80 per pound now. Similarly, March 23 futures prices have fallen from around $2.15 per pound to around $1.77 per pound.

Also, robusta farmgate prices in Karnataka have fallen, but not as precipitously as arabicas. Robusta parchment prices have fallen from around Rs 10,200-10,250 in late August to around Rs 9,000-9,100.

"The global market for arabicas is contracting by the day. It has dropped from a high of 242 cents per pound to 169 cents per pound. However, the rupee's drop could have been much greater," said Bose Mandanna, an arabica grower in Suntikoppa. Concerns about Europe's recession and the war's uncertainty are also weighing on prices, he said.

According to Jeffry Rebello, President of The United Planters' Association of South India (UPASI), the Brazilian crop looks promising. The global macroeconomic environment is not favourable to all commodities. Higher interest rates, inflation, and global tightening are putting pressure on markets, according to Rebello.

N Ramanathan, Chairman of the Karnataka Planters' Association (KPA), attributes the price drop to trader speculation, noting that prices always fall around Diwali and during the New Year.

Fly picking, or the harvesting of early ripened beans for the 2022-23 crop year, has begun in some areas of Kodagu and Chikkamagalur. However, due to an uneven and prolonged rainy season and a lack of adequate sunlight, ripening is unlikely to be even, extending the harvest process.

The Coffee Board estimated the 2022-23 crop to be a record 3.93 lakh tonnes, with 1.16 lakh tonnes of arabicas and 2.77 lakh tonnes of robustas. However, due to the excessive and continuing rains, the Board anticipates that the crop will be 10-15% lower than initial estimates.

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