Cold weather pushes coffee prices at Nairobi auction to new low

What you need to know:

The price of coffee falls to a low of 13,325 per bag. The commodity fetched Sh17,709 per bag in the previous auction held last month.
The drop has been attributed to cold weather that has hampered the drying of the beans.

The price of coffee drifted to a low of 13,325 per bag on the first day of auction at the Nairobi Coffee Exchange (NCE) after the exercise resumed Tuesday from a one month recess.

The commodity fetched Sh17,709 per bag in the previous auction held last month. The drop has been attributed to cold weather that has hampered the drying of the beans.

The decline comes at a time when global prices of the crop have remained low on the back of increased supply in the market, data from the International Coffee Organisation (ICO) shows.

NCE chief executive Daniel Mbithi said that the prices remained low because of the low quality coffee that they are receiving from farmers, noting that they expect an improvement.

“We expect good prices when we start receiving new crop from the farmers, currently we are trading on leftovers that were not cleared when we broke for recess,” he said.

Mr Mbithi says, however, at $152 (Sh13,315), the price is relatively fair given the low quality of the produce.

ICO says the average price was seven per cent lower last month than in May — 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.

The organisation, basing on the information currently available, said that the total production in crop year 2013/14 is estimated at about 145.2 million bags, virtually unchanged compared to the previous year.