Tanzania coffee prices rise, demand seen high

By BUSINESS REPORTER

TANZANIA'S coffee prices rose at last week's auction, buoyed by strong demand for robusta beans from exporters, the regulator Tanzania Coffee Board (TCB) said yesterday.

TCB said 17,793 60-kg bags were offered at the latest sale and 13,711 bags were sold. At the previous sale, a total of 14,264 60-kg bags were up for sale, with 14,117 bags sold.

 All the robusta bags on offer at the auction were sold, pointing to high demand for the commodity.

 "We have seen a shift in demand whereby demand for robusta is currently so high compared to arabica. This result of prevailing global market forces," Primus Kimaryo, director of quality and promotion at the state coffee board said.A steep rise in arabica coffee prices has led the industry to turn to cheaper robusta for blending.

"We expect to have a bumper crop this season in Tanzania, with 90 percent of coffee growers in the country being small-holder farmers. We expect demand and prices to remain high until after October when other coffee-producing regions start bringing their crops into the world market."

Market participants said they expect prices to continue rising due to high demand for the commodity.

"There is generally good demand for Tanzanian coffee. The season started with relatively lower prices, but prices will likely continue to rise due in the coming auctions," said a trader at a local coffee exporting company.

Tanzania, which is Africa's fourth largest coffee grower after Ethiopia, Uganda and Ivory Coast, produces mainly Arabica and some robusta coffee.   

 Prices of its arabica normally track the New York market, while those of robusta take direction from London.

TCB expects the 2012/13 (June/April) crop to rise to 55,000 tonnes from around 32,000 tonnes in the previous season.    

"The overall average price at the Moshi exchange was up by  $5.54 per 50 kg and $3.22 per 50 kg for mild arabica and robusta respectively compared to the last auction," TCB said.    

 "Average prices were above the terminal market by $15.67 per 50 kg and $12.72 per 50 kg for mild arabica and robusta respectively."        

East African coffee is normally packed in 60-kg bags, but   prices are quoted for quantities of 50 kg.    Benchmark grade AA sold at $195.80-$230.00 per bag, compared with $203.00-$211.00 per bag previously.

 The average price was $209.24 per bag, slightly up from $208.80 previously.