Markets & Finance

Coffee price hits one-year high on quality of beans

trade

Traders at the Nairobi Coffee Exchange. PHOTO | SALATON NJAU

The price of Kenya coffee has gone up by 14 per cent to hit a one-year high on account of high quality beans supply.

A 50 kilogramme bag of coffee at the Nairobi Coffee Exchange (NCE) on average traded at Sh24,888 on Tuesday up from Sh21,828 it sold at last week.

Grade AA, which is the premium type, rose from an average of Sh27,030 last week to Sh32,028 this week while grade AB moved from Sh22,950 to Sh25,092.

The high price was last witnessed in February last year and stakeholders are upbeat the new crop coming in from central Kenya will sustain the high price.

NCE chief executive officer Daniel Mbithi noted Kenya coffee is currently among the few attracting a high price due to quality.

He noted the value of the beverage has improved significantly even with the price of coffee in the world market hitting a two-year low.

“High quality coffee that farmers are bringing at the auction is the main reason pushing the price of the crop to a one-year high,” said Mr Mbithi.

Mr Mbithi noted price at the world’s largest auction at New York, where Kenya sells its coffee, has gone down from US 126 cents a pound in December to US115 cents last week.

“These prices come at a time the international prices have plummeted to a two-year low indicating that quality is an important factor in pricing,” he said.

Local crop has overcome a number of global challenges such as weak currencies and oversupply at the international market to fetch a premium price, he said.

“Despite the low global prices at New York caused by the favourable weather forecast in Brazil, the strong US dollar that has led to a weakening of the Brazilian currency, and the Middle East political tension, we are witnessing relatively encouraging prices well above that benchmark,” he said.

The value of Kenya coffee exports rose marginally compared to the period between July and October 2014 and a similar period in 2015, helped by a strong dollar.

Data from the Kenya National Bureau of Statistics (KNBS) indicates the exports grew to Sh2.2 billion in the period under review from Sh2 billion in the corresponding period in 2014.

Coffee remains a major foreign exchange earner for Kenya but its production has been dropping over the years.

Kenya exports more than 90 per cent of the locally produced coffee, mainly used by roasters in blending.