Tanzania's top-grade coffee fetched an all-time high at this week's auction as the harvest of high-quality supply dwindled, traders said on Friday.

The price of benchmark grade AA coffee rose to $339.80 per 50 kg bag from $338.00 per bag at the last sale on January 20.

The prices recorded at this week's auction for premium grade coffee are the highest seen in history. They have never reached this high before, said Geoffrey Mwangulumbi, executive director of the Association of Kilimanjaro Specialty Coffee Growers.

Coffee growers are enjoying the best prices on record at the moment because of the prevailing scarcity of coffee in the market.

Tanzania 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.

Traders said coffee prices at the weekly auctions in Tanzania would remain high in the coming days in line with New York.

It was a very competitive auction, with all the major buyers competing for every lot of coffee, so the prices remain firm. All the good-quality coffee went at good prices, said a trader at a leading coffee exporting company.

Everybody was after the good-quality coffee because the season is drawing to a close. The low-quality coffee fetched much lower prices. We expect the prices to remain much the same in the few remaining auctions of the season.

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, from 36,000 tonnes in the previous season.

The coffee board said more than 96 percent of the total estimated crop production for the season had already been harvested.

Overall average price at Moshi exchange for mild arabica was up by $20.92 per 50 kgs and robusta was down by $12.13 per 50 kgs compared to the last auction, TCB said in its report.

Average prices for arabica and robusta were above the terminal market by $29.25 per 50 kgs and $1.01 per 50 kgs respectively.

East African coffee is normally packed in 60-kg bags, but prices are quoted for quantities of 50 kg.

Grade AA sold at $200.00-$339.80 per bag, compared with $201.00-$338.00 per bag previously. The average price was $294.29 per bag, up from $261.72 previously.

Grade A fetched $200.00-$314.00 per bag, compared with $200.00-$284.00 per bag at the previous sale, and got an average price of $272.16, up from $252.48 previously.

State-run TCB said 8,936 60-kg bags were offered at the latest sale and 6,765 bags were sold. At the previous sale, a total of 11,882 60-kg bags were up for sale, with 9,925 bags sold.

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