Region Kenya: Coffee prices rise on quality

Prices for Kenyan coffee improved at Tuesday's auction ahead of a month-long seasonal break and thanks to better quality, an auction official said.

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The average price for all grades rose to $168.25 per 50-kg bag from last week's $167.99 per bag.

Although Kenya produces only about 1 percent of global output its beans are valued by roasters who blend them with coffee from other countries, earning the east African economy an average of some $100 million each year.

"The two main factors are that we are closing for a month and we are also seeing a bit of good qualities," said Daniel Mbithi, an official of a group that conducts sales at the Nairobi Coffee Exchange (NCE).

The auction will resume on January 13.

Beans that have been arriving for sale in the past few weeks have been from the tail end of the fly crop, which do not usually make top notch brews.

But better quality coffee from the main crop is now in the market.

"There is a bit of influx from the main crop and we are starting to see some good prices too," Mbithi said.

A total 20,335 bags were on offer and 16,570 of them sold for a total $3.4 million.

Region & Commodities: Int'l coffee prices have continued to fall

Business Daily Africa

Prices of coffee are expected to remain on the low as leading traders continued to feel the pinch of restricted credit flows triggered by the current global economic turmoil.

The International Coffee Organisation (ICO) said, like other commodities, the crop had come under the heat of the crisis sending its prices in key international markets plummeting for a third consecutive month.

A market report by the organisation said coffee prices fell further during the month of September, with its own composite indicator price settling at US cents 126.69 per pound compared to US cents 131.14 landed in August.

“The crisis in the global financial markets is having a direct effect on commodities in general, including coffee, despite the fact that the coffee supply and demand fundamentals remain unchanged,” ICO executive director, Nestor Osorio said.

He said the credit shortage caused by the financial crunch was also affecting producers, who are likely to be forced to reduce their expenditures on investment and maintenance, with a possible reduced supply in the medium term.

“Inflation levels are also going up in exporting and importing countries....The US dollar has continued to strengthen in relation to the currencies of many exporting countries while commodity prices in general are falling,” the official said.

The Kenyan coffee industry has not been spared the pinch and prices have kept on a nosedive in the last two months, prompting officials of the weekly Nairobi Coffee Exchange (NCE) to try and appease disillusioned growers.

In a rare show last week, the Kenya Coffee Planters and Traders Association (KCPTA) that runs the auction moved to explain why prices had dipped sharply following protests from growers.

It linked the woes being witnessed locally to instability in leading global markets as a result of the economic turmoil.
The ICO, however, maintained that the economic turmoil may not have a huge impact on the global production of the commodity.

“In the absence of any new information, I am maintaining my estimate of world production in crop year 2008/09 at around 131 million bags,” said Mr Osorio.

Statistics showed that exports by all producers during August reached 7.4 million bags, compared to 8.1 million bags in July while exports during the first 11 months of the coffee year 2007/08 (October 2007 –August 2008) fell by 4.5 per cent to 86.6 million bags for the same period in coffee year 2006/07.

“Credit restrictions and lack of liquidity caused by the crisis could lead to a reduction in supply,” he said.

Region Update: Kenya $ee$ 2008/09 coffee harve$t up 43 pct

NAIROBI, Oct 9 (Reuters) - Kenya (Our special this month: Kenay AA roasted to order: $10.95 lb Click here to buy) will produce an estimated 60,000 tonnes of coffee in 2008/09 (Oct-Sept) crop year as a result of favorable weather in key growing areas, a senior government official said on Thursday.

The east Africa nation produced 42,000 tonnes in 2007/08, said Bernard Gichovi, technical manager at the industry regulator Coffee Board of Kenya.

"If everything goes well, it will be a good harvest," he told Reuters in an interview.

Kenya is a small producer globally, contributing only about 1 percent of the coffee consumed globally, but its specialty beans are sought after to blend with those from bigger growers.

"Weather has been quite good. Rains, which usually start in April, started early in February. So flowering went on well to develop into the fruit (berry)," he said, adding that this year was not as cold as the previous one.

Flowering usually starts in March or April.

Cold weather weakens undeveloped berries, making them drop to the ground before full maturity. This season, however, coffee trees were strong enough to support high output.

"This is because we lost most of the crop last season," Gichovi said.

Growers in Nyeri and Kirinyaga districts of central Kenya, key growing areas, agreed with Gichovi's assessment.

"There is a lot of coffee this season. I can only compare the season with 1987 when we sold the most coffee ever," said farmer Mwangi Gichohi at his Thangathi farm in Nyeri.

Kenya produced a record 130,000 tonnes of clean coffee in the 1987/88 crop year.

Harvests have been on the decline since as prices plummeted globally and as Kenyan farmers accumulated debt and took less care of their bushes.

Although Kenya expects good prices this coffee year, Gichovi said turmoil in the global economy could hurt commodity prices.

But Gichovi projected that coffee prices through direct sales between farmer groups and roasters abroad will be higher this season than previously.

"It is expected that there will be more revenue from the direct sales," Gichovi said. During last season, 30,000 50-kg bags of clean coffee were sold through that system.

Prices ranged between $500 and $700 dollars per 50-kg bag and much coffee from Gikanda Cooperative Society in Nyeri district, fetched $1,138 per bag, Gichovi said.

In the previous 2006/2007 season, Gichovi said Kenya sold only 16,400 bags through the so-called "second window".

Until 2006 when Kenya allowed direct sales, all coffee went through a weekly auction. That system is still in place.

Gichovi said the board advises farmers to go for a direct sale if buyers were offering better prices than the auction would yield. "The reason for the direct sales is to spur prices," he said. (Editing by Helen Nyambura-Mwaura, Editing by Peter Blackburn)

Region & Commodities: Kenya coffee prices fall in line with New York

NAIROBI (Reuters) - Kenyan coffee prices fell again at Tuesday's sale, pushed down by a slide on the New York market, despite better quality beans on offer, traders said.

"As the NYC crumbled further downwards, so did auction prices. Generally quality was good but the prices all fell by around $20 on last week," a report by the Ransley Coffee Company said.

The average price per bag across all grades dropped to $132.88 from $147.82 last week. Only 2,093 of the 13,743 bags on offer found buyers, said the Nairobi Coffee Exchange (NCE).

"It is a difficult time in coffee at the moment as we do not know how much further down the NYC may go, and if it does, prices will trend downwards again despite the better quality being offered," the Ransley Coffee Company report said.

The Kenya Coffee Producers' and Traders' Association (KCPTA) blamed the slump in prices on the global financial crisis.

"KCPTA would wish to plead with farmers not to panic as we wait to see what effect the $700-billion bail-out that was passed last Friday is going to have," it said in a statement.

"Be assured that marketing agents are monitoring the international markets to ensure that farmers get the highest prices possible."

Region: Kenya News

Coffee miller looks beyond Central Kenya for market
The fight for a slice of the coffee market in western Kenya and the Rift Valley is set to intensify with the entry of a new miller in the region.

Central Kenya Coffee Mills is set to move there as forecasts show increased production.

The miller joins Thika Coffee Millers, Sasini Coffee, Socfinaf, and KPCU. After establishing themselves in the main coffee production areas of Central and Eastern provinces, coffee millers and marketers are now fighting for a larger share of coffee from Western and Rift Valley provinces.

The region, which produced 10.2 per cent of the total output in 2007/2008 has been attracting players in the industry as future forecasts show increased production.

Figures from the Crops/Farms survey carried out by the Coffee Research Foundation show that Western Kenya produced 2,090 metric tonnes of coffee while the Rift Valley produced 2,249 metric tonnes in 2007/2008.