Global coffee prices rise on Brazilian crop concerns

Global coffee prices appear to have turned around after a nine-month losing streak, which had threatened to reverse recent gains for Kenya producers.

The International Coffee Organisation (ICO) composite indicator registered strong growth in July 2012, increasing by 10 per cent in a trend reflected on the local Nairobi Coffee Exchange (NCE) during last week’s auction.

Prices on the global market improved 10 per cent to reach Sh263.94 ($3.18.14) per kilo, the highest level in three months.

“The strongest growth was seen in Arabicas, fuelled by concerns over the Brazilian crop after unseasonably heavy rains at the beginning of the month,” said ICO in a monthly analysis.

As a result the top price of Kenya’s benchmark grade AA coffee ticked up three per cent to Sh28,222 ($340) per 50 kg bag from Sh27,473 ($331) last week after successive losses.

Panic had gripped players in the sector making the regulator to make reassurances to farmers not to give up saying the price drop was based on temporary swings.

Significant change

“This marks a significant turn around for farmers following nine consecutive months of falling,” said Loyce Njeru managing director Coffee Board of Kenya.

The country resumed weekly coffee auctions this week following a month-long break, the Nairobi Coffee Exchange said on Tuesday.

The NCE said in its report that grade AA COF-AA-KE fetched between Sh28,000 and Sh16,434 a bag , compared to between Sh27,473 and Sh15,604 a bag at the last auction on July 17.

Grade AB COF-AB-KE sold at Sh19,920 to Sh12,948 ($240-$156) per bag, compared with the previous sale’s range of Sh22,493-Sh15,355 ($271-$185).

The exchange said 23,333 bags of coffee were offered for sale, with 10,695 sold for a total of Sh182.6 million ($2.2 million), at an average of Sh14,100 ($169.89) per bag.

In July 17, 32,581 bags were offered for sale and 19,500 sold for a total of Sh323.7 million ($3.9m) at an average price of Sh13,808 ($166.37) per bag.

Dominant players

High coffee prices seen in the year 2011 had spurred enthusiasm among coffee farmers who had started selling their land to property developers to start increasing production.