Coffee prices decline on low demand, expected surplus


A variety of coffee beans at the Nairobi auction. FILE PHOTO | NMG

Coffee prices continue to decline on the back of low demand and a projected surplus of the commodity in the world market occasioned by a better crop in Brazil and Central America.

The Kenyan beverage recorded a decline in the latest sale per 50-kilogramme bag to stand at $189 (Sh22,886) down from $191 (Sh23,111) previously.

At the New York Coffee Exchange, the price of Arabica fell for the seventh consecutive session this week to hit the lowest in nearly 13 months, with traders focused on favourable weather in top producers Brazil, Central America, Mexico, and Colombia, amid fears of a recession in the global economy.

Kenya sells more than 95 percent of its coffee to the world market and the international prices are used as a benchmark for the local price at the Nairobi Coffee Exchange (NCE).

Coffee traders say favourable weather in Brazil has prompted coffee tree flowering, and is set to continue over the next week with Colombia, Central America, and Mexico witnessing good weather for harvesting.

Coffee earnings increased by $81 million in eight months to August compared with the similar period in the last crop season as more volumes offered at the auction and high demand pushed up the value of the beverage.

Data from the NCE indicates that the earnings in this period were up 62 percent to hit $210 million when compared with $129 million in the corresponding period last year.

The good earnings were also boosted by growth in volumes, which were 46 percent higher in the period under assessment compared with the previous season.

The number of bags sold through the auction increased by 52.58 percent from 377,204 in the previous season to 575,543 at the end of the review period.

The average price per kilo increased from $279.41 in August last year to $297.73 per 50kg bag in the review period marking a 6.56 percentage points improvement.

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