Uganda forecasts surge in coffee prices

Coffee prices both locally and globally have been fluctuating with production in global leader Brazil. However, a senior official at the Uganda Coffee Development Authority (UCDA) says a combination of the rainy season and production struggles in Brazil will play in favour of Ugandan farmers, exporters and processors.

At the moment, a kilogram of Kiboko coffee, the type introduced during the 1960’s colonial government, is fetching between sh2,000 to 2,400. This is slightly better than between sh2000 and sh2,200 in January 2015.

Arabica parchment which comes from the Mbale – Kapchorwa region is also fetching a slightly improved price between sh4,300 to sh4,500 per kilo. This is sh200 better since the year started.

Druggar coffee, which is a common type of dry processed coffee is fetching between sh4,200 and sh4,500 uncleaned and between sh6,000 and sh6,500 when cleaned.

After Robusta coffee cherries are cleaned, they are divided by size. The larger the size, the higher the ‘screen size’ and the higher the price. One kilo of Robusta screen 18 is currently going for $79.75 ¢ (about sh279, 222) and the smaller Screen 12 is at $71.75 (sh251,212) per kilo.

In June 2015 Uganda exported coffee worth $35.26 million at an average weighted price of $1.75 per kilo. Year-on-year, the coffee was 26.75% higher in price and 7.43% higher in value respectively compared to the month ended May 2015.

Cumulatively, coffee exports for nine months now totals 2.45 million bags worth $306million. This is a 9.67% drop in volume but an increase of 3.03% in value.

Rain season starts as Brazil predicts decline in production

Before June’s spike in coffee exports, Uganda’s coffee exports had fallen 8% year-on-year in May to 263,330 60-kg bags, while earnings had also dropped to $30.58 million, compared with $35.91 million in May 2014.

However, with the recent resumption in rains in August, the coffee yields, size of cherries and overall volume of coffee produced. Reports by the Uganda National Meteorological Authority show that the current rains are likely to continue for the next three months around the country.

The Brazil National Supply Company has predicted a 2.3% reduction in coffee production in 2015 from the 45.34 million bags produced in 2014. Despite the overall reduction, Brazil expects to increase its Robusta production by 1.9%. Unlike Uganda which has low consumption of coffee, and thus a very weak internal final-product processing industry; Brazil’s intake of coffee increased from 8.2 million bags, in 1990, to 20 million bags, by the first months of 2012. This means that Brazil influence on the global market, through still huge, is gradually declining.

“Brazil which determines global prices has been having weather problems. This has helped the global recovery of coffee prices. Our weather has started to improve and so the combination of these factors will play in our favour,” UCDA’s Norman Mutekanga says.

Masiga Kenneth Bwire, the export and documentation manager at coffee exports, Lakeland Holdings Limited in the Kampala industrial area says gate prices are currently fluctuating with local and international prices.

“A kilo of coffee can rise by sh500 today and by sh400 tomorrow and then decline by sh800 on the third day. Though rains are starting at home, international prices will also depend on weather patterns in other major coffee exporting countries,” he explains.

Data by the Brazil National Supply Company shows that 2015 will be the third year in a row in which coffee production has declined in the country.

Though Uganda is ranked in the top 11 global producers, local prices will also depend on how Colombia, Mexico, Indonesia, Ethiopia, Peru, Vietnam and other global players react to declining production by the world leading coffee producer.

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