Business Daily (Nairobi)
Allan Odhiambo
2 October 2007
Prices at the coffee weekly auction reached yet another high yesterday, extending a record-breaking streak witnessed in the last four consecutive weeks.
Riding on the laurels of constrained quality offer supplies and speculation in key international markets , the average price of the commodity at the Nairobi Coffee Exchange (NCE) hit a mark of $141.30 (Sh9,749.70) per 50kg bag amid indications that a similar fate could be in the offing come the next sale because the currently supply situation is unlikely to change much, at least in the short term.
It is important to note that the dollar is the preferred denomination among coffee traders and they use it in all dealings.
"The pricing is incredible, they are partly driven by speculation in that rains had been expected across Brazil at the weekend but failed to come and this has triggered speculation that market could remain short for a while," Ettiene Delbar of Socfinaf Coffee Limited told Business Daily.
Brazil is one of the largest producers of the commodity but has been experiencing a dry spell that has slowed down its production. Consequently, supplies to key international markets has been lacklustre, pulling up pricing as buyers scrambled for the few available offers.
In Kenya, an outbreak of the coffee berry disease (CBD) in most growing regions following the recent cold and damp spell has affected output of the commodity and the market now heavily relies on supplies for the eastern region of the country which is unable to meet the huge demand.
The industry has revised its projected out put for this year by about 5,000 metric tonnes to 48,710 metric tonnes on the grounds of the disease out break and other effects of the cold spell witnessed in several growing areas.
The average price landed yesterday represented a growth of about $4 (Sh279) per 50 kg bag over the previous sale or a climb of $13(Sh897) per 50kg bag of the commodity in the last four weeks alone.
"We had expected even higher prices because of the low volumes of quality that came through...key markets such as New York were also bullish and the expectations were really high but the landed average prices are nonetheless impressive and everyone is happy," Daniel Mbithi, an official at the NCE said.
Meanwhile coffee producers worldwide have approved a new international coffee agreement that will govern future operations of the industry.
The new agreement, accepted by the International Coffee Council contains a number of significant new features for international cooperation, including facilitating the availability of information on financial tools and services that can assist coffee producers.
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