Coffee price at weekly Nairobi sale falls again

Money Markets

A coffee farmer in Nyeri. The Coffee Directorate says El Niño rains will hurt yields. PHOTO | FILE 

By GERALD ANDAE

In Summary

• A 50-kilogramme bag traded at Sh17,955, down from Sh18,165 during the previous sale at the Nairobi Coffee Exchange.
• Coffee prices in the country have been volatile in the last one month mainly because of low prices at the world’s largest auction in New York.

The price of coffee at the weekly auction fell last week for the second time in a row.

On average, a 50-kilogramme bag traded at Sh17,955, down from Sh18,165 during the previous sale at the Haile Selassie Avenue road-based Nairobi Coffee Exchange (NCE).

This came as a global report from the International Coffee Organisation released this month indicated that global daily coffee prices in the world hit a 19-month low last month partly negatively affected by the currency movement.

“Coffee exports in July 2015 came to 9.6 million bags, 3.6 per cent lower than last year, with total exports for the first ten months of coffee year 2014/15 (October to July) 2.8 per cent lower on 92.9 million bags,” reads the report.

Coffee prices in the country have been volatile in the last one month mainly because of low prices at the world’s largest auction in New York.

Kenya normally pegs its prices on the New York exchange sales and any slight change during the trading affects the local market since more than 90 per cent of the local coffee is exported.

According to ICO, further volatility in the price of the beverage could be provoked by reports that this year’s El Niño event could be one of the strongest on record, potentially disrupting the timing and volume of rainfall in several producing countries.

“We are looking at a situation where the prices might go up in future resulting from the shortage of coffee in the market because of El Niño rains that might affect production,” said Coffee Directorate head Greenville Kiplimo in an earlier interview.

READ: El Nino fears push up coffee prices at the auction by 17pc

Through the Coffee Directorate, the government says the rains will create a conducive environment for the coffee berry disease, which is likely to reduce the volumes offered for sale.

The technical committee from the State agency has planned a meeting to discuss precautionary measures to take to forestall massive losses of the crop.

Kenyan coffee is in high demand, mainly in the United Kingdom and the United States, with traders buying it for blending with lower quality beans from other parts of the world.