Bengaluru (Commodity Online): Economic crisis has failed to make a dent in global consumption and coffee growers seem to be on a bullish market as consumption is growing at an average annual rate of 2.4%.

Meanwhile, the International Coffee Organisation has revised the world consumption figures for calendar year 2008 from the earlier estimate of 128.4 million bags to 130 million bags. Although India accounts for only 4% of the global coffee production, its Arabica and Robusta varieties are set to gain world market share due to its quality, aroma and competitive pricing. After four consecutive fiscal years from 2000-01 to 2004-05 when markets turned out to be bad for Indian coffee growers, suddenly the odds have turned in their favour as they are now getting a far better price for their produce relative to the depressive period from 2000-05.

Comparative studies show that the price of India-grown Arabica shot up to Rs 135 per kg in fiscal 2007-08 from Rs 77.50 per kg in fiscal 2004-05 and the price of Robusta increased to Rs 70 per kg from Rs 31.90 in the same period at international auctions.

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At Indian Coffee Trade Association (ICTA) auctions in Bangalore, Arabica (Plantation A) price soared by 36% to Rs 180 per kg in the first nine months (January-August) of 2009 from Rs 132 per kg in the same period of 2008, while the price declined by 13% in Robusta Cherry to Rs 83 per kg in the first nine months of 2009 from Rs 95 per kg in the same period of 2008.

Karnataka accounted for 70% (183,860 tonnes) of the coffee production (262,300 tonnes) in the country during fiscal 2008-09. With Kerala contributing 22% (57,200 tonnes) and Tamil Nadu chipping in with 6.2% (16,255 tonnes), southern India accounted for 98% (257,315 tonnes) of the total output last fiscal. India’s share of global production and exports is a mere 3.5%.

Global Prices
Although the monthly average of the ICO composite indicator price increased by 4% in August, from 112.90 US cents per lb in July to 117.45 US cents per lb, daily indicator prices of the four groups of coffee fell during the last two weeks of August and the first week of September. The differentials between Colombian Milds and the other groups of coffee have also narrowed, particularly in the case of the differential with the New York futures market, which is down by 17.8% from 64.87 US cents per lb in July to 53.34 US cents per lb, the Executive Director of International Coffee Organisation said in a note.

The long-term outlook for coffee demand continues to be bright, mainly due to growth in
specialized niches in mature markets and the incorporation of new consumers in emerging markets, ICO Chief said.

ICE Arabica futures have gained this week on fresh speculative interest and roaster buying interest.

ICE arabica coffee futures closed solidly higher, near the session high, and hit a four-week high on Monday. Fresh speculative and roaster buying interest was featured. Chart-related buying and buy stops, or pre positioned orders to buy, also boosted the market as prices moved above technical levels. December coffee closed up 655 points at $1.3310. September coffee closed up 680 points at $1.3210. Liffe robusta coffee futures followed the U.S. market higher Monday. LIFFE Sep & Nov settled up $17 each at $1491/ton & $1505/ton respectively.