Coffee prices rise to three-month high at Nairobi auction
Improved quality of beans has raised price at the Nairobi Coffee Exchange to a new three-month high. FILE PHOTO
Coffee prices have defied a slump in commodity to register a new high at a time when other agro-based prices have dipped.
In this week’s auction the price of a 50 kilogramme bag of coffee went up by 17 per cent to attain a new high in the last three months.
On average, a bag offered for sale attracted $238 (Sh20,706) from $204 (Sh17,748) in last week’s auction at the Nairobi Coffee Exchange (NCE).
Meanwhile, the price of tea, one of Kenya’s top foreign earners is trading at a three-month low following the volatility in the world market.
NCE chief executive officer Daniel Mbithi said the coffee price has been precipitated by the new crop coming in from farmers compared to previous auctions when low quality crop was trading.
“This week we received high quality crop from the farms and it has played a key role in boosting the prices,” said Mr Mbithi.
Mr Mbithi noted that the price of the commodity is expected to remain high for a while with an increase of high quality beans from growers, raising hopes for farmers who had been hit by low prices in the recent months.
Cold weather in major coffee belts had hampered the delivery of the new crop to the auction, affecting the price of the commodity as the auction had to trade on low quality coffee from the previous crop.
The low prices have also been blamed on the low consumption of coffee by Kenyans who take less than five per cent of the beverage.
“If we would be consuming more of coffee, then the local market would be a stabilising factor when it comes to price as currently the figure at which we sell our coffee is based at the international price,” said former managing director of the defunct Coffee Board of Kenya Isabela Ngoke.
The increment comes at a time when global coffee prices have remained low as a result of insufficient stocks to cover current demand levels, this according to the International Coffee Organisation (ICO) June 2014 report.
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 estimates the total coffee production in the year 2013/14 to be about 145.2 million bags, virtually unchanged on 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 by roasters for blending.
