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

Money Markets

Kenyan coffee is in high demand, mainly in the United Kingdom and the United States. PHOTO | FILE 

By GERALD ANDAE

In Summary

• During the Tuesday auction, a 50-kilogramme bag of coffee traded at Sh19,158 on average, up from Sh17,922 in the previous auction.
• This marked the highest price since the Nairobi Coffee Exchange (NCE) resumed from a one-month recess in July.

The price of coffee has gone up 17 per cent as demand at the auction rose this week with traders buying more in anticipation of El Nino disruption.

During the Tuesday auction, a 50-kilogramme bag of coffee traded at Sh19,158 on average, up from Sh17,922 in the previous auction. This marked the highest price since the Nairobi Coffee Exchange (NCE) resumed from a one-month recess in July.

“The demand was high this week as traders bought more quantities for future sales as they anticipate good prices in the coming days,” said the head of coffee directorate Greenville Kiplimo.

Mr Kiplimo said coffee prices might go up in the coming days due to a shortage that might be caused by the anticipated El Nino rains which are expected to cut farm yields.

He said the rains create a conducive environment for the coffee berry disease and this is likely to reduce the volumes available for sale.

“We are looking at a situation where the prices might go up in future due to shortage of coffee in the market because of El Nino rains that might affect production,” he said.

The technical committee from the coffee directorate will be meeting next week to discuss precautionary measures to forestall massive losses from the cash crop.

The price increase came as a surprise to NCE because of the low international prices at the world’s leading coffee exchange in New York.

“This is unexpected improvement as we were not anticipating the prices to go up in the wake of low international prices,” said chief executive Daniel Mbithi.

The world price of coffee has remained at a low of 120 dollar cents per pound in the last two auctions from a high of 139 dollar cents per pound mid last month, affecting the value of the local produce.

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

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