Tanzania coffee prices rise ahead of holiday season

DAR ES SALAAM (Reuters) - Tanzania's coffee prices rose at its latest auction, lifted by a rush to meet futures commitments ahead of the Christmas break, traders said on Monday.

State-run Tanzania Coffee Board said 19,127 60-kg bags were offered at the sale and 17,402 bags were sold. A total of 18,640 60-kg bags were up for sale in the previous auction, with 16,697 bags sold.

"Overall the average price at Moshi exchange was up $8.75 per 50 kg for mild arabica compared to the last auction," TCB said in its weekly report.

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 $143.00-194.20 per bag, compared with $129.00-$185.00 per bag previously. The average price was $168.20 per bag, up from $161.81 previously.

Grade A fetched $142.00-$173.40 per bag compared with $122.00-$167.00 per bag at the previous sale and got an average price of $168.50 up from $159.20.

Traders said prices at the auction rose ahead of the holidays and in line with a late surge in the New York market.

"The traders are panicking ahead of the holidays because this season the crop is very small and many are falling short of their futures commitments," said a trader at a leading coffee exporter.

The auction houses are likely to shut for three weeks from mid-December.

"New York did not pick up until late last week and Tanzania also then followed this rise," said another trader, who also cited pressures from the oncoming holiday season.

TCB forecasts the 2009/10 (June/April) crop will fall to 50,000 tonnes in the continent's fourth-largest coffee grower -- after Ethiopia, Uganda and Ivory Coast -- compared with 68,331 tonnes in the last season.

Tanzania mainly produces arabica coffee and grows some robusta coffee. Prices of its arabica normally track the New York market while those of robusta take their cue from London.

The auction was held on Thursday and TCB issued the results on Friday.

Source name: Reuters