Because of a drop in the price of the grain, during the first eight months of the 2018-2019 harvest Honduran coffee sales abroad totaled $673 million, 14% less than what was reported in the same period of the 2017-2018 cycle.
According to figures from the Honduran Coffee Institute (Ihcafe) between the first eight months of the 2017-2018 harvest, which runs from October 2017 to May 2018, and the same period of the 2018-2019 season, sales and exported volume decreased from $786 million to $673 million, and from 6.4 million to 6.3 million, respectively.
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.
Factors such as the international price and a reduction in productivity, explain the 60% drop in production of this grain in Costa Rica 's Central Valley over the last 17 years, ceding the land space to real estate development.
Areas in the Central Valley that had previously been considered the best for coffee growing, have been giving way in recent years to new constructions, both residential and commercial, mainly east of San José.
The prices of the three groups of the Arabica variety fell in April, but the highest month-on-month reduction was recorded in the price of natural coffees in Brazil.
In April 2018, theICO composite indicator decreased by 0.4%to an average of 112.56 US cents/lb, with the daily price ranging between 110.49 US cents/lb and 114.73 US cents/lb.Prices for all three Arabica groups fell in April 2018, though the largest month-on-month decrease occurred for Brazilian Naturals, which fell by 0.9% to 118.76 US cents/lb.
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 downward trend seen in international grain prices "raises doubts about the economic viability of coffee production."
From the Introduction of a document entitled "Assessment of the economic sustainability of coffee production", prepared by the International Coffee Organization:
Introduction Since March 2015 the ICO composite price has been consistently below the 10-year average of 137.24 US cents/lb, raising concerns about the economic viability of coffee production and putting the livelihoods of coffee producers at risk in many countries. Prolonged periods of low prices strain liquidity at the farm level, resulting in less than optimal input use during the following production cycle, negatively affecting yields and quality.
Coffee exports declined in the last two months because the new crop from Brazil has not yet hit the market, but consuming countries remain relatively well stocked.
From the report by the International Coffee Organization:
The ICO composite indicator rose to a 17-month high in July, although the market struggled to hold on to its early gains. Coffee exports have slowed in the last couple of months, as the new Brazilian crop has not yet come to market, but consumer stocks remain relatively well supplied. Furthermore, Conab released its survey of domestic private stocks as at the end of March 2016 as being just 5.4% lower than the previous year, down from 14.4 million to 13.6 million bags.
5.5 million bags of 46 kg have been exported to date, registering a decrease of 3% compared to the 5.7 million bags sold in the same period of the 2014-2015 harvest.
From a report by the Honduran Coffee Institute:
Exports to date total 5.51 million bags of 46 kg, showing a decrease of 3.02% compared to the 5.68 million exported in the same period of 2014-2015.The value of exports is 690 million dollars showing a decrease of 23% compared to the 897 million recorded on this date in 2014-2015, which is due to the drop in prices during the current harvest.
In El Salvador the drop in the international price, which has been aggravated because of the negative differential with which the country's production is paid, comes on top of the problems of performance, processing and logistics costs.
An analysis of the Salvadoran coffee sector, made by Patricia Garcia in an article on ElSalvador.com, shows that "...
International prices deepened their fall in July in response to the devaluation of the real in Brazil, reaching the lowest level in the last 18 months.
From the monthly report by the International Coffee Organization:
The coffee market registered further decreases in July with prices reacting to the depreciation in the Brazilian exchange rate, which dropped to a 12-year low against the US dollar.
Coffee prices continued their decline as speculation over the current 2015/16 Brazilian crop
suggests that the market has no immediate supply concerns.
From the monthly report by the International Coffee Organization (ICO):
Coffee prices continued their decline in reaction to speculation about the data on the current 2015/16 Brazilian crop, which suggest that there will not be market concerns over the immediate effects on global supply.
Good grain inventory levels globally have kept prices relatively stable and low in April.
From a monthly report by the International Coffee Organization (ICO):
Coffee exports from Brazil reached a record level of 36.8 million bags in crop year 2014/15 (April-March), driven by domestic stocks and favored by a depreciation in the exchange rate. According to calculations by Conab it estimated at the moment that production in the 2015/16 crop year will be about the same, between 44.1 and 46.6 million bags. However, since domestic consumption in Brazil has reached about 21 million bags, the availability of exports will be significantly lower next year. Overall, prices remained low in April 2015 despite a slight increase from March as consumer stocks remain relatively well supplied. In addition, recent reports on the next Brazilian crop suggest that damage may not be as severe as expected.