Demand for Kenyan coffee falls as Brazil makes return

A variety of coffee beans at the Nairobi auction

By Business Daily Africa

Demand for Kenya’s coffee has declined following a rebound in production by Brazil, which had in the last two years recorded a sharp decline creating a shortage globally.

Kenya’s earnings from coffee significantly rose in the last two crop seasons on the back of a decline in volumes pushing up demand for the local produce.

Nairobi Coffee Exchange (NCE) chief executive officer Daniel Mbithi says the waning demand is a result of expected growth in volumes at the global market.

“Brazil is expecting a better harvest this season and the drop witnessed in the latest sale is due to a lack of demand for the local crop,” said Mr Mbithi.

The crop in Brazil was hit by bad weather in the last two years, cutting supplies from the world’s top producer.

In the latest sale, the price of coffee declined to $198 for a 50-kilogramme bag on average from a high of $215 that had been recorded in the first sale of the new crop year held last week. The coffee year normally starts in October.

The declining demand comes at a time when Kenya is about to start harvesting the main crop that starts hitting the market in November. At the moment, coffee that is trading is from the short-season crop from parts of western and eastern Kenya.

Coffee earnings rose by $81 million in eight months to August when compared with the same period in the last crop season as more volumes offered at the auction and high demand pushed up the value of the bean.

Data from the NCE indicates that earnings in the review period were up 62 percent to hit $210 million when compared with $129 million in the corresponding period last year.

The good earnings were also boosted by growth in volumes, which were 46 percent higher in the review period compared with the previous season.

The number of bags sold through the auction increased by 52.58 percent from 377,204 in the previous season to 575,543 at the end of the review period.