Prices for Robusta coffee in record rise
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.
Brazil were down by
21.5% to 2.5 million bags, with exports of green Robusta from
Brazil down by over
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.