Kenya's Benchmark Coffee Grade Drops at Auction as Bean Quality Declines

Kenya's benchmark coffee dropped 5.4 percent at an auction yesterday after the quality of the beans declined and some buyers stayed away from the auction, the Nairobi Coffee Exchange said.

The top Arabica AA type sold for an average of $447.52 for a 50-kilogram (110-pound) bag, compared with $472.83 a week earlier, the agency said in an e-mailed statement from Nairobi, the capital. Supplies of the grade climbed 0.9 percent to 4,556 bags, it said.

The price for all coffee sold slipped 2.5 percent to $345.14 a bag from, as supplies fell 2 percent to 16,758 bags, the agency said. Total sales increased 15 percent to 10,110 bags worth $4.27 million as buyers replenished their stocks as the close of the auction season draws closer, the exchange said.

Export sop has ‘instant' effect on robusta demand

Bangalore,

Exporters of instant coffee are making full use of the 5 per cent benefit recently announced under the Vishesh Krishi and Gram Udyog Yojana with effect from January 1 this year, by buying robustas in large quantities.

As a result, robusta cherry prices are still ruling at levels of Rs 2,500 for a 50-kg bag towards the end of the harvesting season, almost the same level as the price in December 2010. Last season, the price dropped from about Rs 2,500 in December 2009 to about Rs 1,800 in February and March 2010.

The export concession is expected to reverse the sluggish trend in soluble coffee exports since January 2011, conferring a competitive advantage on India at a time when world consumers are looking to cut costs, industry observers said.

Ugandan Coffee to Benefit from Biomass Energy Developments

9th March 2011, Based in the US, Taylor Biomass Energy has entered into a collaborative agreement with Ugandan Sesam Energetics Ltd, for the construction of a biomass gasification plant worth US$160 million in the country’s Kampala region.

According to the US biomass energy company, the new plant will have the potential to generate more than 40MW of bio-based power, as well as recycling a minimum of 1,030 metric tons of Kampala’s municipal solid waste every day – providing sufficient energy for more than 35,000 homes.

In terms of coffee, Uganda, which is the largest producer of Robusta coffee in Africa, has been struggling with power shortages since 2006. This has had a direct knock-on effect on the country’s manufacturing industry, which is led primarily by processing plants handling raw commodities such as coffee, tea, cotton and fish.

At present, Uganda is dependent on costly fuel-driven thermal plants to produce almost half of its electricity requirements, as a result of the reduced water levels on its two key hydro power stations, following a period of prolonged drought in 2006.

FORECAST : Arabica futures on track to hit $3/lb by end-Q1

* Analysts revise coffee price estimate up to $3/lb

* Noncommercial interest seen lifting market

* Rising open interest adds to market's bullish mood

Arabica coffee futurestrading on ICE will reach $3 per lb in the near future as demand holds and supplies of the high-quality beans are tight,while recent harvests and hesitant roasters are temporarilylimiting the ascent, analysts said.

"Three dollars for coffee is only 15 cents away, so it is within shooting range by specs," said Rodrigo Costa,

vice-president of Institutional Sales for Newedge USA.

"The lack of selling could take prices higher easily, and technically the market is favoring bulls to charge into theirlongs."

Arabicas rally to 34-year peak on slim supplies

* Arabicas surge as short bean supplies buoy values

* Trade ponders move in Ivory Coast on cocoa trade

* Sugar charges ahead due to tight supplies

US arabica coffee futures climbed to a 34-year peak Tuesday on the back of scarce bean supplies, and  analysts said that could push prices even higher in the coming weeks.

Cocoa eased, but stayed close to a 32-year high as civil war in top grower Ivory Coast limited losses. Sugar popped up from recent lows as investors covered short positions.

ICE's May arabica coffee futures climbed 6.05 cents to close at  a 34-year settlement high of $2.872 a lb, having also hit a 34-year intra-day top at $2.8765.

COFFEE AND COCOA FORECAST FOR TODAY & MARKET CLOSE RIVIEW , 8 March 2011

Arabica coffee futures galloped up more than 2 percent on Tuesday, closing at the highest level in 34 years on noncommercial buying as some producers and exporters held back beans in hopes the market would climb further, dealers said.

Uganda Coffee Development Authority’s Arabica Prices

The Uganda Coffee Development Authority today quoted indicative prices for exports of arabica, which accounts for 15 percent of the country’s shipments.

Uganda is Africa’s second-biggest coffee producer, after Ethiopia, and the biggest robusta coffee producer on the continent.