Prices for Ro­busta cof­fee in record rise

East African Business Week - - NEWS - BY SA­MUEL NABWIISO

KAMPALA, UGANDA -- Cof­fee farm­ers in East Africa are ea­gerly watch­ing mar­ket trends as prices on the in­ter­na­tional mar­ket con­tinue to rise.

Ac­cord­ing to the In­ter­na­tional Cof­fee Or­ga­ni­za­tion (ICO) cof­fee prices rose sig­nif­i­cantly in Oc­to­ber, mainly due to con­cerns over Ro­busta sup­ply. Ro­busta is used mostly for in­stant cof­fee.

The monthly av­er­age of the ICO com­pos­ite in­di­ca­tor hit a 21-month high of 142.68 US cents/lb (2.2 kilo­grammes), with the Ro­busta in­di­ca­tor at its high­est level in two years.

Uganda is the big­gest Ro­busta ex­porter in East Africa, while Kenya dom­i­nates the Ara­bica va­ri­ety with Tan­za­nia not far be­hind.

How­ever Uganda has seen a drop in vol­umes and earn­ings com­pared to the pre­vi­ous year, ex­port­ing 3.3 mil­lion kilo­gramme bags in Septem­ber com­pared to 3.4 mil­lion bags 12 months ago.

In 2015 Kenya cof­fee pro­duc­tion stood at 45,000 met­ric tonnes, but plans for this year are to raise it to 47,000 tonnes or more. Tan­za­nian cof­fee pro­duc­tion av­er­ages be­tween 30,000 to 40,000 tonnes each year of which ap­prox­i­mately 70% is Ara­bica and 30% is Ro­busta.

Ara­bica, used by Star­bucks and other brands of pre­mium cof­fee, is priced 30.1% higher than last year.

Ship­ments from

Brazil were down by

21.5% to 2.5 mil­lion bags, with ex­ports of green Ro­busta from

Brazil down by over

90%.

The price has also been af­fected by reports of se­ri­ous droughts in Viet­nam, the other ma­jor pro­ducer.

Viet­nam ex­ports in­creased in Septem­ber, es­ti­mated up by 61.7% to 2 mil­lion bags, which would rep­re­sent the high­est Septem­ber ex­port vol­ume on record.

Ro­busta prices now up by nearly 40% since the be­gin­ning of the calendar year, av­er­ag­ing above $1/lb for the first time since Novem­ber 2014.

The three Ara­bica groups also in­creased, by be­tween 1.5 and 2.2%. The ar­bi­trage be­tween Ara­bica and Ro­busta there­fore nar­rowed com­pared to last month, but re­mains wider than a year ago.

The ICO says the mar­ket has been largely driven by the on­go­ing con­cerns over Ro­busta sup­ply, as well as grow­ing spec­u­la­tion over the size of the next 2017/18 Brazil­ian crop, as

Ship­ments from Brazil were down by 21.5% with ex­ports of green Ro­busta down 90%

Ara­bica will be go­ing into an off year in its bi­en­nial cy­cle.

The Brazil­ian real has also been ap­pre­ci­at­ing against the US dol­lar, reach­ing its strong­est level for over a year, which has helped to sup­port the mar­ket.

In terms of the group in­di­ca­tors, the ICO says the strong­est per­for­mance was recorded in Ro­bus­tas, which in­creased by 7% com­pared to last month.

ON THE RISE: Ro­busta prices are up nearly 40% since the be­gin­ning of the cal­en­der year ac­cord­ing to the ICO report.

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