Uganda aims to double coffee earnings despite weak prices

June 14, 2017 in Business, Foreign News, Markets, Trade & Industry by Editor

Near full warehouses in the major consuming countries has been pushing bean prices down since the beginning of year.

June 14—The International Coffee Organization (ICO) says in its latest monthly report, prices have been falling since February 2017 due to better weather in major growing regions, as well as the general downturn in global commodity markets.

In May, coffee prices continued to weaken as the monthly average of the ICO composite indicator price dropped significantly compared to April. It was down 3.8% to 125.40 US cents/lb (about $250 a kilogramme).

The daily price of the ICO composite indicator started May relatively strongly, making up some of the losses of the previous month and increased to a high of 128.66 US cents/lb on May 8th. However, most of these initial gains were subsequently lost as the market fell to 124.02 US cents/lb by the end of the month.

Uganda’s export volumes however remain at 2016 levels. According to the Uganda Coffee Development Authority (UCDA), in April 326,232 60-kilogramme bags of the beans were exported, little difference from the 326,793 bags shipped out during the same month last year. Uganda is Africa’s top Robusta producer, but also grows some Arabica in the highlands of the West and East.

Annual earnings from coffee have averaged between $350 million and $400 million or just over 20% of total exports during the past three years. The government however, wants earnings to double by 2020, the year it also wants Uganda to enter the middle-income bracket. The coming financial year, UGX50 billion (nearly $14 million) is going towards purchase and distribution of coffee seedlings.

The London-based ICO says in April significantly less coffee was shipped globally compared to the same month last year. Total exports are estimated at 9.5 million bags, down 5.3%. The slowdown was particularly pronounced for shipments from Brazil, which dropped by 13.5% to 2.1 million bags, while Vietnam is estimated to have exported 6.9% less.

According to the ICO, the international market is well supplied and inventories in consuming countries are high as a result of strong exports in the first seven months of the coffee year. For the first time in three years, Colombian Milds traded above other Milds (mild flavours). Finally, Conab have released their second estimate of production in Brazil for 2017/18, which they forecast is to decrease by 11.3% to 45.56 million bags compared to crop year 2016/17.