Coffee prices flat on release of hoarded beans

Prices at the Kenya coffee auction were flat on Tuesday after 7,000 tonnes of hoarded beans were released to the market, cancelling out demand.

A 50-kilogramme bag fetched $224 (Sh19,264) on average at the Nairobi Coffee Exchange (NCE), maintaining last week’s level.

In New York, at the world’s largest coffee exchange, the beverage traded at an average of $1.9 (Sh164) per two kilogrammes (pound) compared to a low of $1.76 (Sh152 in the past auction.

“The New York is picking while we have received some good quality coffee from Nyeri. These factors combined, have seen the price of coffee trade at the figure that it registered last week,” said NCE chief executive officer Daniel Mbithi.

Coffee prices had declined from $292 (Sh25,112) to $224 (Sh19,264), a 23 per cent drop, over the previous four weeks.

Nyeri County had been holding the coffee ahead of a direct sale to overseas markets as the county government experimented whether this would improve earnings.

The county has started releasing the stocks after a deal with marketers and the national government.

The Coffee Board of Kenya showed that the county had already exported seven tonnes of beans through direct auction.

READ: Coffee farmers push middlemen aside in new deal

Mr Mbithi, however, said specialty coffee, which can be exported directly, only accounts for a fifth of the coffee produced in Kenya, meaning most of the Nyeri crop would still be sold through the auction.
Kenya Coffee Traders Association executive secretary James Michuki said some farmers were keeping quality beans from the market in anticipation of higher prices.
Mr Mbithi dampened such hopes of a price recovery because most of the bean being offered was of low quality as is common with the tail end of the season.
“The price might rise but not significantly because low quality coffee forms the highest bulk of what we are receiving,” he said.
Prices at the New York Exchange are expected to remain high as drought persists in Brazil, the world’s biggest coffee producer.
The auction is likely to go on recess next month and resume in July when the new season starts.