Bullish forecast for robusta coffee on tight supplies, blending uses

The outlook for Robusta variety of coffee looks good in the next couple of years on tight supplies amidst the increasing use of the stronger coffee bean for blending in various other drinks. 

“Fundamentally, the outlook for robusta is very strong. There is a shortage and this will keep prices higher,” said Kailash Nathani, Managing Director of Sucafina India. 

At a panel discussion on Growing Importance of Robusta Blends at the World Coffee Conference in Bengaluru, Nathani said there was a shortage of robustas as certified stocks in London were down. 

The International Coffee Organisation in its August report said that certified stocks in London were down by 34.6 per cent at 0.58 million bags of 60-kg each, touching the lowest in 20 years. 

Nathani said with interest rates being high, roasters in Europe and the US, who used to store coffees, are going hand to mouth, resulting in empty pipelines. “Everybody wants to keep stocks and so they have to buy,” said Nathani. As a result, prices are expected to rule above $2,000 per tonne, he told businessline. The November futures of robustas on LIFFE are hovering around $2,464 per tonne. 

The Indian coffee growers, Nathani said, realise about 92-93 per cent of the terminal prices in London, while the rest goes into the handling and shipping costs including the margins of exporters which stands at 1-2 per cent. 

Blending use

Further, Nathani said the use of robusta in coffee blends is on the rise. “As against 10 per cent some 40 years ago, the use of robusta for blends has gone up to 40-45 per cent” he said. About 80-90 per cent of the robustas are produced by the small holder farmers in countires such as Vietnam, Uganda, Tanzania and India among others. 

Amir Hamza, Chairman of the African Fine Coffee Association, said robusta coffee is increasingly being used as a blend in energy drinks, juices, soda and other caffeine based drinks. As arabicas are expensive, the robustas are being used as blend into various drinks and also in chocolates and candies among others, he said. “Considering the increased usage of robusta for blending, the growers have a bright future,” Hamza added. 

Sunalini Menon of Coffee Labs said while the production is 171 million bags while consumption is 178 million bags. Arabica accounts for 60 per cent of the coffee output globally, while robustas account for the rest. 

With the changing climate pattern impacting the output, it is said that the cultivation of arabicas may not be sustainable by 2050, Menon said. However, robusta, which is resilient to pest and disease and has higher soluble content and distinctive flavour nodes, can be grown both in the higher altitude and in the lower altitude, she said.