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Kenyan Average Coffee Price Falls 15% as Supplies Increase

February 01, 2012

(Updates with comment from trader in fourth paragraph.)

Feb. 1 (Bloomberg) -- Kenyan coffee prices fell 15 percent at an auction yesterday as supplies increased and as demand was subdued, the Nairobi Coffee Exchange said.

The average price for all coffee sold dropped to $280.87 a 50-kilogram (110-pound) bag from $331.87 two weeks earlier, the Nairobi-based agency said today by e-mail. It didn’t hold an auction last week because of insufficient supplies.

The average price for the benchmark AA grade was little changed at $405.73 a bag, from $405.91 at the previous sale, after supplies rose, the exchange said. Supplies of the grade increased 7.2 percent to 5,267 bags, while sales fell to 584 bags from 2,396 bags, the exchange said.

“Prices were down because of low demand,” Kizito Keya, a coffee dealer at Mumba Coffee Ltd. said by phone from Nairobi. “It appears many buyers had already covered their positions and are waiting for new orders.”

Sales at the auction fell almost 17 percent to 6,564 bags valued at $2.24 million from 7,883 bags worth $3.2 million at the previous auction, the agency said.

Supplies of the beans at the third auction of 2012 climbed 12 percent to 26,902 bags from 23,962 bags, the agency said.

Kenya harvests the bulk of its crop from October through December, while a secondary crop is reaped from April to June.

The nation, whose output slumped 13 percent to 36,629 metric tons in the 12 months ended Sept. 30, from 42,096 tons a year earlier, is yet to make a forecast for 2011-12, Isaac Muchomba, an official at the Kenya Coffee Traders Association, said Jan. 17.

The following are details of yesterday’s auction in U.S. dollars for a 50-kilogram bag:

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