African Coffee Producers See Low Prices on High Brazilian Outputby
Continent's growers want to focus on specialty bean production
El Nino impact insufficient thus far to sway global market
African coffee producers expect low prices on the world market in 2016 as high output from Brazil could hurt the prospects for any increase.
“Brazilian production is quite high for the coming season, so there is no shortage of coffee and therefore the market can’t support high prices,” Abdullah Bagersh, Chairman of the Africa Fine Coffees Association, said in an interview. “Could prices go lower? Yes, of course because we have seen lower prices than where we are now. So we cannot discount that the market cannot go lower.”
Brazil, the world’s biggest coffee producer and exporter, could grow as much as 52 million 60-kilogram bags this year, from 43.2 million bags in 2015, according to the nation’s supply agency known as Conab. The crop is currently in a higher-yielding half of a two-year cycle.
Average prices on the New York market have dropped 40 percent since early last year to 120 U.S. cents per pound, Bagersh said Thursday during an industry conference in the Tanzanian commercial capital, Dar es Salaam.
While the El Nino weather phenomenon has affected some growing countries on the continent, its impact hasn’t been big enough to affect the market, Bagersh said.
The effect has been more severe in other regions. In some areas of Columbia, farmers have reported losses of approximately 90 percent of the crop following El Nino-induced drought, according to the country’s National Federation of Coffee Growers.
Africa accounts for only a 10th of the total global output, down from 20 percent in the 1970-90s, Tim Schilling, Executive Director of World Coffee Research, said at the conference.
While African producers want to increase production to significant levels, they are focusing on growing specialty beans to hedge against price volatility and regain their market share, Bagersh said.
“As a market segment, specialty is the fastest-growing one,” he said. “In Europe and the U.S., the commodity market is mature, but the specialty market is still growing. So it’s proof to us that specialty is one way to really continue growing.”