Coffee stocks: Why share prices of Tata Coffee Ltd, CCL Products and likes are rising? Know triggers, benefits for Indian companies with Anil Singhvi

Anil Singhvi, Managing Editor at Zee Business, on Tuesday said that the shares of coffee companies like Tata Coffee Ltd and CCL Products (India) Limited are showing good action. Giving insights and explaining the triggers behind the same, Ashish Chaturvedi, Research Analyst at Zee Business, said that the prices of Robusta coffee is at a high of 4 years.

Explaining the reasons behind the hike in price, the research analyst said that the Vietnam is the major producer of Robusta and the increase in concern of delta variant of Covid-19 in has led to lockdown like situation in its major city Ho Chi Minh City and hence trading has become difficult.

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He further added that the prices of Robusta coffee have jumped by 54 percent from the beginning of the year. The other variant of coffee that is Arabica's prices are also rising. Brazil is the major producer of Arabica and it is facing severe climatic issues, the analyst added.

At first Brazil was hit by draught and then frost which has completely damaged the coffee cultivation there. Ashish said that as per experts', farmers in Brazil will have to replant coffee. He further added that it will take around 2-3 years for this situation to normalize.

That is the supply issue will be there in coming future as well. Another reason behind the rise in price of coffee is issues with shipping container which is increasing the cost of logistics and freight after which producers add on their cost, the analyst added.

However, this situation will benefit Indian companies, Ashish said. India is the 7th largest producer of coffee, but the domestic consumption of coffee is very less because of which the surplus produce can be exported, the analyst said.

Around 70 precent of coffee produced in the country is being exported and if see the data related to per capita consumption of coffee then around 330 gram of tea is being consumed on an average while only 100 gram of coffee is being consumed. He further added that as per reports around 10-12 percent increase in exports of coffee has been reported.