Coffee price rises 5 per cent on high demand at global market
What you need to know:
On average a 50 kilogramme bag traded at Sh13,130 up from Sh12,243 in previous trading at the Nairobi Coffee Exchange (NCE).
Kenya exports nearly 95 per cent of its coffee making it vulnerable to low international prices in times of volatility.
NCE chief Daniel Mbithi said even though there was slight improvement at the auction, the prices are still low compared to the previous months due to poor quality coffee coming in from farmers.
The price of coffee rose five per cent at this week’s auction helped by high demand at the New York Exchange.
On average a 50 kilogramme bag traded at Sh13,130 up from Sh12,243 in previous trading at the Nairobi Coffee Exchange (NCE).
The price at the New York Exchange — which is the benchmark market — went up from US 120 cents a pound last week to 134 cents, boosting the local sales.
“The price of coffee went up this week because of high demand at the New York Exchange which played a significant role in boosting the local sales,” said Daniel Mbithi, chief executive officer at the NCE.
Kenya exports nearly 95 per cent of its coffee making it vulnerable to low international prices in times of volatility.
Mr Mbithi said even though there was slight improvement at the auction, the prices are still low compared to the previous months due to poor quality coffee coming in from farmers.
Low quality berries
Data from the NCE indicates the crop earned the country Sh10.1 billion between October last year and April this year compared to Sh10.6 billion fetched in the previous comparable period, with decline partly blamed on low quality berries.
The volumes of coffee sold through the auction increased to 24.3 tonnes compared with 23.8 tonnes last year.
On average, coffee started the season at the NCE at Sh15,655 a 50-kilogramme bag, rising to a peak of Sh24,038 for the same quantity in March before declining to the current figures.
The NCE, however, is hopeful of a recovery, both at home and globally. It is banking on high quality coffee from eastern Kenya that will start trading at the auction in July.
Also, the impact of El Nino has led to lower coffee harvests in Vietnam and Brazil, a situation that is expected to push up the prices of the crop on low global supply as the two countries are major world producers.
Brazil is the world’s biggest coffee producer, accounting for more than 33 per cent of the total production.
Coffee remains a major cash crop and top foreign exchange earner for the Kenyan economy, ranked the fifth. Others are horticulture, tourism, tea and the diaspora remittances.
It was once ranked number one.
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