Tanzania's 2013/14 coffee auction season has started as prices are low in the global market but local sales are supported by strong demand for top quality beans, the regulator Tanzania Coffee Board (TCB) said on Tuesday.
Market participants said all the top quality coffee supplied last week was sold at the first auction of the season.
“The new coffee auction season is starting as prices of the commodity at the world market are lower than expected due to an abundance of supply from Brazil, which has depressed the market,” Adolph Kumburu, TCB's chief executive, said by telephone from Moshi in northern Tanzania where the auctions were being held.
TCB said introduction of new crop varieties and expansion of planting areas were expected to boost output, while the regulator is looking to sell into the Chinese market.
“The main export markets for Tanzanian coffee are Japan, the United States and European Union member states such as Germany,
France and Italy,” Kumburu said.
“Our sales to the United States have been increasing steadily over the past decade, but we are also currently working on unlocking new markets such as China, which is a huge market, as well as South Korea.”
TCB forecasts the June 2013 to April 2014 crop will fall to 45,000 tonnes in Africa's fourth-largest coffee grower after Ethiopia, Uganda and Ivory Coast, from 71,600 tonnes in the previous season.
“The 2012/13 production broke a 20-year record. The current 2013/14 season is a low output cycle, that's why we expect to see a decline in production,” Kumburu said.
Tanzania mainly produces arabica coffee and grows some robusta coffee. Prices of its arabica normally track the New York market, while robusta prices take their cue from London.
State-run TCB said 11,526 60-kg bags were offered last week, with 10,807 bags sold. “Average prices were above the terminal market by $10.45 per 50 kg for mild arabica and robusta were above the terminal market by $16.59 per 50 kg,” TCB said in its weekly report.
East African coffee is normally packed in 60-kg bags, but prices are quoted for quantities of 50 kg.
Benchmark grade AA sold at $141 to $159 per bag. The average price was $147.49 per bag.
Grade A fetched $140.80 to $159.80 per bag and got an average price of $144.64.