News Column

Coffee prices hit four-month high

February 12, 2014

GERALD ANDAE -1



Coffee prices have hit a four-month high in the international markets, lifting farmers' earnings at the Nairobi Coffee Exchange (NCE).

Global coffee prices have surged driven by fears of a shortage following decline in production from Brazil, which is the world's leading producer.

"The recent publication of official Brazilian production estimates for crop year 2014/15, which is due to start in April suggests that the output could fall for the second consecutive crop," says the report by International Coffee Organisation.

The report indicates the uncertainty over the 2014/15 crop, worsened by dry weather in some coffee producing regions has given support to prices over the past month.

The price, says the report, has been increasing consistently over the course of last month, starting from a low of $0.45 per kilogramme (about Sh42) to a high of $0.53 (about Sh48), which was an increase of 12 percent.

At the NCE, the price of a 50 kilogramme bag of coffee went up by $2 (Sh172) to trade at $210 (Sh18,060) compared to last week.

The prices have trended upwards since last month, with farmers set to earn good returns, following the rebound.

The move comes as a relief to both farmers and the traders who had been worried by the low price that the commodity has been fetching from October last year.

Between October and December last year, the Kenyan coffee fetched an average of $181 per 50-kilogramme bag.

The volume of weight offered at the auction has also gone up, perhaps indicating a response to the good prices that the beverage has attracted.

In this week's auction, the number of weight offered for sell went up to 1.4 million kilogrammes from the previous figure of 987,000 kilogrammes.

READ: Coffee farmers to gain as pent-up demand lifts prices

Over 90 percent of locally produced coffee is meant for export market, last year; the country earned 12.4 billion from the crop in foreign exchange.

In an earlier interview, NCE executive officer Daniel Mbithi expressed optimism that the good prices are likely to be witnessed in the coming days, urging farmers to release their stocks to the market.

Mr Mbithi also attributed the rebound on the recovery of the economic meltdown in Europe, saying it had played an instrumental role in making the local price of the commodity to gain.

"We may witness an upsurge in the price due to recovery of Eurozone Crisis, this is one of the factors that helped our local prices," said Mr Mbithi.


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Source: Business Daily (Kenya)


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