The season for Ethiopia, Kenya and Central America is wrapping up so now is the time to plan your buying for the second half of 2021. Colombia, Peru and Brazil are all in harvest, but there are some challenges you should consider: the C- price has rallied, Colombia is in the seventh week of a nationwide protest, and the global pandemic is still affecting the industry.
But crisis is part of our business. We adapt and work around them, and there are always great coffees to be found. 🙂 Here is an overview of the current situation to help you make some qualified decisions for planning and pre-booking.
There has been a price rally in the coffee market this spring. The C market went from 125 USC/lb in early April to above 160 USC/lb in early June. If the price stabilises here it could be great for farmers and the industry. However in the short term it will likely disrupt supply chains and create challenges for exporters, importers, and roasters.
What this practically means for us, and you as a buyer, is that prices for parchment and greens in Colombia, Peru, and Brazil are higher than last year. The exchange rate of local currency will also influence the outright prices in USD, which can affect price both ways.
The increased C-price will probably affect the bigger volumes of low-to-medium priced producer blends, more so than the micro-lots. We expect our 85+ scoring coffees might increase by $0.20-$0.50 USD/lb. It might also affect the volumes of specialty in some origins and areas as the incentives for producers to invest in production of quality has decreased. In Colombia farmers are earning more for commercial grade parchment now than what they earned for specialty grade parchment last year.
Many parts of Colombia are in harvest now, and will stay in harvest for the next few months. The civil unrest makes it hard to move coffees to port, but we hope that will come to an end soon. You can read more about the civil unrest in Colombia in Joanne’s blog post.
Right now Colombian producers are earning over 1.4 million COP per carga for standard commercial qualities. This is more than what was paid for specialty grades this time last year. High prices are great for farmers, but this means you will have to pay about 25 – 50 USC/lb above what you paid for a good 85+ producer blend last year.
Even if you would and could buy Colombians now, we recommend waiting a couple of months. Moving coffees to port might remain challenging for some time, so we will be careful in our buying as we don’t want coffees stuck in Colombia for too long.
Fortunately Nariño and Huila’s harvest will continue for several months, so there will be great coffees in August, September and onwards.
Overall volumes in Brazil are lower this year. A drought in parts of the country led to a drop in commercial volumes, which is one of the factors driving up the C-price. That said, most producers where we work in Minas Gerais and Sul de Minas are fine. Several factors are working to protect their volumes including the local climate, their bi-annual high volume cycle, plus the way they manage their farms with pruning and other techniques. Things are looking good with a lot of quality cherries on the trees, so we’re expecting some exciting coffees this year.
Last year the norm for coffees of above average quality was 400 – 600 BRL/60 kg bag of high-commercial bica (unsorted green coffee). Now the prices are at or above 1000 BRL for the same quality. The Real is also stronger towards the USD. Right now we would have to pay about 30-50 USC/lb more for good qualities in higher volumes, compared to last year. However we think this might change some weeks from now. It’s still early in the season, and the first quality pickings are on the table. We will have to wait and see what the screen sizes are to fully understand how prices will be impacted. If overall screen sizes are lower, we can do a lower screen size as a standard to compensate on price, without necessarily compromising on quality.
Coffees are looking good, and we expect the first amounts of quality samples in 1-2 months from now. Prices are hard to predict, but the situation will be the same for everyone in the industry. If all goes well we can move early coffees in August/September.
They are just starting to harvest in some of the higher altitudes where we work. In other places they won’t start before July and the harvest will continue until October. Quality looks better than last year, and coffees are cupping very well considering how early it is. Peru has been badly hit by the Covid-19 pandemic but our partners in Cajamarca report they have access to pickers and logistics are currently unaffected.
Last year the standard pricing for parchment from the farmers of commercial to high commercial qualities was around 380 – 420 PEN/quintal. Right now similar qualities are earning prices above 700 PEN/quintal. Many of the bigger players are hoovering the local market to cover their needs. This can change based on the demand and contracts, and/or if they run out of cash, so there may be a drop in the local purchase price. Right now we expect to pay 20 – 30 USC/lb more than we paid last year.
We should receive the first representative samples in July, and can start shipping coffees from August/September. We have pre-contracted good amounts of coffees already, which gives us priority. The Sol has weakened against the USD which helps lower export prices. They might be slightly up, but of all the South American origins in harvest, we expect prices in Peru will increase the least.
Need help navigating prices, logistical delays and currency fluctuations? Our team is here. Contact Alex to start a conversation about your buying for the second half of 2021.