Kenyan Coffee Prices Dip Slightly As Brazil Drought Boosts Global Rates

The value of Kenyan coffee edged down slightly but remained strong as the Nairobi Coffee Exchange held its first auction of the season, with global prices buoyed by a prolonged drought in Brazil, the world’s largest coffee producer.

The price for a 50-kg bag of Kenyan coffee fell to $256 from $257 at the previous sale, as the country nears the end of sales from its lower-grade short-term crop.

The auction marked the first sale of the new crop year, with traders awaiting the arrival of higher-quality beans from farmers which is expected from November.

Kenya’s coffee year begins in October, and the country is expected to gain from a global supply squeeze caused by drought in Brazil.

Brazil’s key coffee-growing regions are facing their driest conditions since 1981, severely reducing output and driving up global coffee prices.

Between May and August, Brazil’s agricultural hub endured its driest period in over 40 years, according to Cemaden, the country’s natural disaster monitoring agency.

With no rain forecast in the next two weeks, the drought is expected to further tighten the global supply of coffee.

Kenya, along with other East African coffee producers such as Ethiopia and Uganda, is poised to benefit from the price surge.

In 2021, Kenya saw a similar rise in earnings when frost in Brazil sharply cut coffee production.

Meanwhile, the Kenyan government is pushing for reforms in the coffee sector, aiming to boost farmers’ earnings by reducing the role of intermediaries in the value chain.

By Business Day Africa.