India coffee prices ease on low demand, global cues

MUMBAI, Nov 21 (Reuters) - Prices at the Indian Coffee Trade Association's Thursday auction eased as buyers stayed away anticipating a further fall in price due to weakness in overseas markets, traders said on Friday.

"Most varieties of coffees on offer received little enquiry as buyers are awaiting a further price fall," said a Bangalore-based trader, who did not wish to be identified.

New York arabica coffee futures continued downward to finish weak on Thursday on nervous selling by funds and investors as deepening economic concerns hit stock and commodity markets.

India produces only 4 percent of the world's coffee but exports 70-80 percent of it, thus mirroring global trend.

Arabica cherry coffees on offer remained unsold as sellers were asking higher price, said another trader.

However, prices are likely to recover on lower production estimates and rising consumption, he said.

India's Coffee Board has lowered its estimate for total coffee output in 2008/09 by 5.6 percent, citing untimely rains in October in some parts of Karnataka, the largest growing state. See [ID:nBOM224441]

Total coffee production is likely to come down to 276,600 tonnes from an earlier estimate of 293,000 tonnes, the Board said in its post-monsoon estimate released on Thursday.

The world coffee markets will see a deficit and price recovery in 2009/10 as output in main producer Brazil will fall but demand will keep growing, the head of the International Coffee Organization said last week. See [ID:nLB625521]