Primus Kimaryo, director of quality and promotion at the TCB
According to the International Coffee Organisation (ICO), coffee
prices have recently followed a similar declining trajectory to global
commodity prices. It says that the downward trend over the last year has
been driven by concerns over slowing economic growth in China and the
increasing likelihood of a US interest rate rise.
At the Moshi Coffee Exchange, the price of Mild Arabica fell
against at the last week auction. Tanzania Coffee Board (TCB) data for
the sale show that the price of a 50-kg bag slumped by over US$6 from
what it fetched during the previous auction.
“Overall average price at Moshi Exchange were down by
US$6.26/50-Kgs for Mild Arabica compared to the last auction held on
November 12, 2015,” TCB said in a market report.
This week’s auction was held yesterday. Tanzania uses New York ICE
futures prices as its benchmark for Arabica prices and London’s Liffe
market for Robusta prices.
“Moshi Exchange average prices were above the terminal market by
US$4.81/50-Kgs for Mild Arabica. New York March deliveries were down by
US$4.40 cents/Lb equivalent to US$4.85/50-kgs FOB and the London market
January delivery were down by US$121 per metric tonne equivalent to
US$6.05/50-kgs FOB compared to last week terminal market,” the report
added.
Primus Kimaryo, director of quality and promotion at the TCB, said
on Wednesday that the trend has begun sending shockwaves across the
spines of stakeholders. The most worried are farmers and traders, who
said the slump has come at the wrong time and will adversely affect
their end-year and January plans.
Coffee farmer and marketer John Kanjagaile said the industry had
projected a tonne of Robusta to be above US$2,000 but that has not been
the case.
“In May, the price of a tonne of Robusta in London was US$2000.
Today (Wednesday), the price plummeted to US$1,500 and this was not what
we had expected,” he told The Guardian from Bukoba.
For the third consecutive week, no Robusta coffee was offered at the Moshi auction.
Kanjagaile said sellers for the breed must have opted for direct
sales while the major Robusta seller at the exchange, Kagera Cooperative
Union, had sold all of its stock that was small this year.
“We did not have much coffee this time,” he said.
The TCB report show that out of the 21,401 bags of Mild Arabica
offered during the November 19 auction, only 19,311 bags were sold. On
November 12, the offered amount was 31,706 bags of which 19,977 bags
were sold.
Traders offered 25,722 bags on November 5 and the sold amount was
19,914 bags. During the auction, the overall average price at the Moshi
Exchange was down by US$1.91/50-Kgs for Mild Arabica.
Until last week, the sold coffee this month amounted to 59,112 bags compared to the offered amount of 78,646 bags.
Tanzania is Africa’s fourth-largest coffee producer after Ethiopia,
Uganda and Ivory Coast. Nearly all its coffee is exported mainly to
Japan, the European Union and the US, and is looking to increase its
market in East Asia, especially China.
Last year, 41,100 tonnes were exported to earn the national economy
US$121.5 million. In 2013, the exported volume was 59,500 tonnes that
raked in US$171 million.
According to the latest review of the economy by the Bank of
Tanzania (BoT), coffee export earnings for the year ending September
2015, 2014 and 2013 were US$157.8 million, US$127.8 million and US$180.9
million respectively.
“Despite a slight jump in coffee prices at the beginning of
October, these gains were short-lived as global commodity markets turned
lower. Total exports for coffee year 2014/15 dropped for the first time
in five years, but still reached the relatively high level of 110.7
million bags,” ICO said in a report.
“Looking ahead to the coming year, however, several major producing
countries are facing potential production setbacks, putting a lot of
pressure on the 2016/17 Brazilian crop,” it adds.
SOURCE:
THE GUARDIAN
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