With a few weeks to go before the end of the 2017/18 agricultural cycle, entrepreneurs in the sector project that production will amount to 1 million hundredweight less than initially expected.
In a complicated context, with international prices at record lows and rising local production costs, Honduras is projecting less grain production for this cycle.
In Guatemala the union of producers has stated that a reduction in international prices is affecting the sector, which is already facing difficulties in covering production costs.
The National Coffee Association attributes the problem to international consortia, which may be exerting further downward pressure on grain prices.They warn that this situation will have a strong impact on the national economy, because with current prices, producers are not even able to cover their costs.
Prices for all coffee groups fell in July 2018, though the largest month-on month decrease occurred for Brazilian Naturals, which declined by 4% to 110.54 US cents/lb.
From the monthly report by the ICO:
In July 2018, the ICO composite indicator price decreased by 2.9% to an average of 107.20 US cents/lb, which is the lowest monthly average for July since 2007, when the monthly composite indicator reached 106.20 US cents/lb.
After a slight increase in the first month of 2018, in February international prices fell by 1%, due to the negative behavior of three groups of the Arabica variety.
From the monthly report by the International Coffee Organization:
After a slight rise in January following a three-month decline, the monthly average of the ICO composite indicator fell by 1.2% in February 2018 to 114.19 US cents/lb.
The Guatemalan union of the sector announced that the reactivation plan they are preparing is based on the renovation of coffee plantations within a period of five years.
The National Coffee Association (Anacafé), is working in conjunction with the ministries of Public Finance, Agriculture, Livestock and Food and the Inter-American Development Bank, on a plan for economic reactivation of the sector, which could be ready in the coming weeks.
Exports in the first eleven months of the 2016/17 harvest totaled $17.6 million, 53% more than anything sold to the Asian country in the 2015/16 cycle.
One of the main benefits of exporting grain to Japan is that the average price paid for coffee is higher than the amount paid in other markets.According to figures from the Center for Exports, "...
A sample of the grain from a farm in the municipality of Acatenango obtained the highest price in the online auction known as the Coffee Excellence Cup in Guatemala.
Angel-in-us Coffee and Maruyama Coffee Co. yesterday bought the two lots of high-quality Pacamara coffee produced in the municipality of Acatenango by the El Paraxaj estate. In the Excellence Cup online auction, the highest price was $58 per pound and the second highest was quoted at $53.41.
Production in April amounted to 834 thousand bags of 60 kilos, 20% less than production in the same month in the previous harvest, when 1.04 million bags were recorded.
Larepublica.co reports that"...The reason for the fall in production last month, according to the National Coffee Growers Federation (FNC), could be a delay in the blooms responsible for the harvest in the first half of the year.On the other hand, production for the current year was 4.4 million bags an increase of 4.8% compared to production in the same period in 2016."
In March the growth in inventories in most varieties reinforces the fact that the market lacks any clear signals of a reverse in the current downward trend.
From the monthly report by the International Coffee Organization (ICO):
In March, the ICO composite indicator price fell slightly. While Robustas remained broadly stable, Arabica prices were under pressure.
A reduction has been projected of between 10% and 15% in the 2017/18 harvest due to the effects of drought and frost in different production areas in the country.
The projections are the result of an assessment carried out by the technical department of the National Coffee Association (Anacafe) in different parts of the country.For the 2017/18 harvest a production of 3.35 million hundredweight is expected.
The growing debt now exceeds $180 million and a lack of funds to invest in research and renovation of the park is increasingly reducing the possibility of the industry improving.
For companies in the coffee sector, with each passing year the situation is getting worse.Not only are the effects of weather on plantations hurting their performance, but so is lack of investment in research and funding necessary for an activity that is becoming less competitive compared to other producers and exporting countries.
Up to February 1 2017, exports totaled 2 million bags of 46 kilos, an increase of 41% compared to the same period in the 2015/2016 harvest.
From a report by the Honduran Coffee Institute:
Exports to date total 2,025,986.39 bags of 46 kg, an increase of 40.88% compared to the 1,438,099.70 recorded in the same period in 2015-2016.The value of exports is 292.94 million showing an increase of 60% compared to the 177.83 million recorded on this date in 2015-2016.
The largest producer of washed Arabica coffee increased its harvest in the last twelve months by 3%, reaching 14 million bags each weighing 60 kilos.
From a statement by the National Federation of Coffee Growers in Colombia:
The General Manager of the FNC celebrated production levels and coffee prices and invited coffee growers to take advantage of them to plan for the future.He also recalled that current price levels are offsetting losses in the first half of the year. In the last twelve months Colombia coffee exports amounted to 12.39 million bags.
The Producers Guild estimates that in 2016 the harvest will close with 14.5 million bags of 60 kilos, 1.5 million bags more than originally projected.
Weather conditions which are better than those foreseen at the beginning of the season explain the improvement in the forecast for production at the end of the harvest, which was initially estimated at 13 million bags, if the effects of El Niño occurred as predicted.