Coffee Prices Hit Three-month Low As Demand Declines

The price of Kenya’s coffee at the Nairobi auction dropped to a three-month low in this week’s sale, reflecting lower demand due to biting inflation in key markets.

Continued recovery in supply from the world’s leading producer Brazil has also caused the benchmark coffee price in New York to retreat.

Kenya benchmarks its coffee prices on the trading at the New York exchange, which is the world’s largest auction for the produce.

Data from the Nairobi Coffee Exchange (NCE) indicates that the price of the beverage dropped to Ksh 30,891 ($257) this week, from Ksh31,853 ($265) in the previous sale. This is the lowest price seen since May.

NCE chief executive officer Daniel Mbithi said the price of coffee in New York, where Kenya sells most of its coffee, has declined to 230 cents per pound on Tuesday from 240 pounds previously.

Kenya sells nearly all its coffee at the international market, with less than five percent left for the local market. The bulk of the exports are in form of cleaned beans, with the remainder sold as roasted coffee.

The price of the commodity has also been weighed down based on quality of beans, which has been going down since the end of April when the main crop season ended.

The auction is now getting new crop from eastern and western Kenya, which will sustain the trading up to November when the main season produce is expected to return to the market.

Kenya is seeking to raise the amount of coffee, which is locally roasted, by five to 10 percent annually over the next five years, although concerns remain over falling yields and reduced acreage under coffee.

Kenya has been expanding the planting of coffee to non-traditional growing regions such Kitale and Eldoret to boost productivity in the wake of declining production in the country.