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DAR ES SALAAM (Reuters) - Tanzania's coffee prices fell at the latest weekly auction in line with global trends, but traders said on Monday that prices were likely to rise in the coming weeks.
"The decline in coffee prices ... followed the international markets. But coffee prices in Tanzania remain very high," said a trader at a leading coffee exporting company.
"The outlook is that there is not a lot of coffee left to sell, so the volumes are going down. The prices in the auction should maintain their current high levels."
Tanzania produces mainly arabica coffee and some robusta coffee. Prices of its arabica normally track the New York market, while those of robusta take their cue from London.
More than 80 percent of Tanzania's estimated coffee production for this season has already been sold, according to coffee traders.
"The season usually officially closes in March, but it could end earlier than that. More than 45,000 tonnes of coffee have already been sold so far," Adolph Kumburu, director general of the Tanzania Coffee Board (TCB), told Reuters.
"South American coffee started getting into the market in November as Tanzania's coffee season is heading towards its end."
State-run TCB said 18,028 60-kg bags were offered at the latest sale and 15,399 bags were sold.
At the previous sale, a total of 13,092 60-kg bags were up for sale, with 10,683 bags sold.
"Overall average price at Moshi exchange for mild arabica was down by $10.46 per 50 kgs compared with the last auction," TCB said in its weekly report.
"However, average prices for arabica were above the terminal market by $10.21 per 50 kgs."
East African coffee is normally packed in 60-kg bags but the prices are quoted for quantities of 50 kg.
Benchmark grade AA sold at $185.00-$264.20 per bag, compared with $235.20-$251.00 per bag previously. The average price was $226.16 per bag, down from $242.68 previously.
Grade A fetched $187.00-$260.20 per bag, compared with $224.00-$250.80 per bag at the previous sale, and got an average price of $232.53, down from $239.69 previously.
TCB forecasts the 2010/11 (June/April) crop will rise to 55,000 tonnes in the continent's fourth-largest coffee grower after Ethiopia, Uganda and Ivory Coast, which compared with 36,000 tonnes in the last season.
The auction was held on Thursday and TCB issued the results over the weekend.
(Source: http://af.reuters.com/article/investingNews/idAFJOE6B50EP20101206)
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