Disease raises international coffee prices

Commodity prices at the Nairobi Coffee Exchange (NCE) are expected to remain high in the short-term following a fungal disease outbreak in Central America.

A severe outbreak of coffee leaf rust (CLR) disease has destroyed large swathes of crop in Guatemala, Nicaragua, Costa Rica, El Salvador and Honduras-leading to depleted supplies to global markets.

Guatemala is the worst hit by the disease with the UN’s Food and Agriculture Organisation (FAO) projecting a 40 per cent drop in the country’s coffee production this year.

The current epidemic, considered the region’s worst ever recorded, followed abnormal rains in late 2012, coupled with inadequate control measures due to the high cost of fungicide.

“Preliminary estimates of the incidence of the epidemic indicate extensive crop damage, with early forecast pointing to a significant reduction in this year’s production,” the agency said.

“It is likely that also the production of the 2014 would be negatively affected due to the severe defoliation in large growing areas and the need to replace the damaged plants.”

The effects of the disease outbreak in Central America have triggered a climb in global prices of the commodity thanks to a scramble for the available stocks.

Traders and growers in Kenya have benefited from the price changes. Prices at the NCE mainly track after those in key international outlets such as the New York Futures market.