Coffee prices rise by a third in first week after recess

Money Markets

Improved quality of beans has raised prices since the auction resumed at the Nairobi Coffee Exchange. FILE PHOTO 

By GERALD ANDAE

In Summary

• The price of a 50 kilogramme bag coffee increased to $202 (Sh17,748) at the Nairobi Coffee Exchange (NCE) from $152 (Sh13, 224) during the last auction held in July.
• The weekly auction was delayed in the last two weeks as NCE could not get enough volumes for the exercise.
• The increment comes when the international prices of coffee have remained on the back of improved supply in the market.

Coffee prices shot up by 33 per cent this week as auctions resumed in Nairobi after nearly a month of recess.

 

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The price of a 50 kilogramme bag coffee increased to $202 (Sh17,748) at the Nairobi Coffee Exchange (NCE) from $152 (Sh13, 224) during the last auction held in July.

Improved quality and reduced supply during the cold weather in major coffee growing regions were linked to the new prices.

Daniel Mbithi, the NCE chief executive officer, predicted further rises in the coming weeks even as supply improves.

“We expect the prices of coffee to go up with the coming in of new quality crop from farmers,” said Mr Mbithi told the Business Daily Thursday.

The weekly auction was delayed in the last two weeks as NCE could not get enough volumes for the exercise.

The beans from the new season crop were expected at the auction when it resumed from a previous recess three weeks ago but the cold weather prevented attaining the required moisture content.

READ: Cold weather pushes coffee prices at Nairobi auction to new low

The price of Kenya’s benchmark coffee grade AA also went up to trade at $307 (Sh26,709) from $292 (Sh25,404) in the previous auction with the volumes offered for sale increasing to 683,446 kilos from 538,541.

The increment comes when the international prices of coffee have remained on the back of improved supply in the market, according to the June 2014 report of the International Coffee Organisation (ICO).

Small grower

ICO says the average price was seven per cent lower in the month of June compared to May, being the lowest average since February.

“With still no consensus on the size of the Brazilian crop, and sufficient stocks to cover current demand levels, prices of all four group indicators have drifted lower over the past two months,” reads the report.

ICO, based on the information available, said that the total production in crop year 2013/14 is estimated at around 145.2 million bags, virtually unchanged from the previous year.

Kenya is a relatively small coffee grower, producing less than one per cent of the world’s total production, but its specialty coffee is sought after for blending by roasters.