Coffee prices hit four-month high

Mr Job Chemutai, a Coffee farmer with a co-worker stand in a trial garden for the new robusta Coffee at Kituuza in Mukono. Photo by David Mafabi

What you need to know:

Experts attribute the rise in prices to cumulative exports in the current coffee year, Dorothy Nakaweesi writes.

Global coffee prices have climbed to a four-month high rallying at above 135 cents of a dollar it last traded in June.
This is good news for producing countries including Uganda whose production has increased to take advantage of the price shift.
According to the International Coffee Organisation (ICO), in the month ending August, prices edged upwards compared to July when the commodity’s price was quoted at 131.52 cents of a dollar.

The ICO report showed: “During the first 10 months of the coffee year 2016/17, total exports hit the 100 million bag mark and were 5.7 million bags higher than last year when 96.3 million bags were shipped.”
Experts attribute the rise in prices to cumulative exports in the current coffee year which has remained at very high levels, bringing about higher inventories in importing countries.

The ICO report, however, shows a varied picture in a detailed examination of the export data for major producing countries.
In Brazil, exports in July were 11 per cent lower compared to last year. In total, Brazil exported 1.75 million bags, of which 1.5 million bags were green coffee. Arabica coffee comprised 98.9 per cent of all green coffee shipments.

“This is the lowest level of exports recorded since February 2004 and results from a combination of the previously poor harvest and an unfavourable dollar exchange rate eroding the competitiveness of Brazilian coffee on the world market,” ICO report showed.
While in Vietnam, the second largest producer, shipments in July were estimated to have reached 1.55 million bags, indicating a 29.6 per cent lower than the previous year.

However, looking at the cumulative exports for the first 10 months of coffee year 2016/17, there were only 5.4 per cent lower compared to last year.
In Colombia, on the other hand, significant increases in exports were recorded. Volumes shipped during July have doubled compared to last year.

Uganda’s status
When global coffee prices go up, farmers in producing countries such as Uganda will be assured of money in their pockets and export earnings will increase.
Uganda Coffee Development Authority’s director quality and regulatory services, Mr Edmund Kananura Kyerere, said earlier the country’s production increased to 4.2 million (60kg) bags up from 3.5 million bags.

“We expect more crop-harvest to come on board as new gardens come up countrywide according to information from UCDA,” Mr Kyerere said.
The country earned $490 million (Shs1.7 trillion) from the 4.2 million- 60 kg bags of coffee exported in the last financial year 2016/17.
The previous financial year 2015/16 the country earned $352 million (Shs1.2 trillion) from 3.6 million 60kg bags exported.