DAR ES SALAAM (Reuters) - Tanzania's coffee prices rose at last week's auction, driven by demand from exporters for high-quality beans, the regulator Tanzania Coffee Board (TCB) said on Tuesday.
The number of bags offered for sale at the auction more than doubled from the previous sale as growers increased supply to take advantage of rising prices.
State-run TCB said 18,616 60-kg bags were offered at the latest sale, and 15,280 bags were sold. At the previous sale, a total of 8,223 60-kg bags were up for sale, with 6,526 bags sold.
All the robusta coffee offered at the auction was bought.
"The coffee supplied to the auction last week was of high quality, while demand has been increasing following the resumption of coffee auctions after the holiday recess," TCB's chief auctioneer, Desideri Mboya, told Reuters by telephone from the northern town of Moshi, where the auctions are being held.
"We expect prices at our auctions to remain above the terminal market heading to February-March, since there will be a shortage of coffee harvests this season compared to the previous one."
Market participants said the up-take of coffee on offer at the weekly auctions was increasing due to global demand.
"Many traders have returned from their holidays and are keen to cover their short positions and compensate for the previous two-week lull in trading," said a trader at a coffee exporting company in Tanzania.
"There is good quality coffee being supplied from the southern and northern parts of the country and everybody wants to get their hands on it."
Tanzania, Africa's fourth-largest coffee grower after Ethiopia, Uganda and Ivory Coast, produces mainly arabica and some robusta coffee. Prices of its arabica normally track the New York market, while those of robusta take direction from London.
TCB forecasts the 2011/12 (June/April) crop will fall to 45,000 tonnes from 56,247 tonnes in the previous season.
"Overall average price at Moshi exchange was up by $17.40 per 50 kg for mild arabica compared to the last auction," TCB said.
"Average prices were above the terminal market by $33.64 per 50 kg and $32.75 per 50 kg for mild arabica and robusta respectively."
East African coffee is normally packed in 60-kg bags, but prices are quoted for quantities of 50 kg.
Benchmark grade AA sold at $206.00-$301.60 per bag, compared with $201.20-$331.00 per bag previously. The average price was $283.74 per bag, up from $273.86 previously.
Grade A fetched $203.00-$283.00 per bag, compared with $206.20-$295.00 per bag at the previous sale, and got an average price of $273.63, up from $266.67 previously.
The auction was held on Thursday and TCB issued the results on Tuesday. The next auction will be held on January 26.
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