We finished off part one of the Origin Review in Mexico, and from there we head south to Honduras!
July – Honduras
This year’s harvest was challenging for the large Central American coffee producer. Due to the high (at that time in any case) coffee price producers had less incentive to focus on quality and sell through their traditional channels. Many of the large exporters quickly realised they had oversold and the drop in supply only exacerbated this challenge. The result? Middlemen showing up at producers’ houses offering a very high price for their coffee, in cash. This hurt long-standing coffee cooperatives who rely on their members to deliver x % of their harvest into the coop. Some contracts got rolled to the next harvest, and others got swapped out for Peruvian coffee, which had just begun its season in earnest.
August – Peru
It quickly became apparent that the same supply issues that had plagued Honduras were also present in Peru, with a drop in production of reportedly between 15 to 20%. It would turn out a much safer option to swap the original Honduras contracts to Peruvian ones as now some of the fixation levels of the original Honduras contracts that were rolled to the new harvest are nearly 100% lower than now. Pre-finance banks already have less appetite for coffee in general, so the fact that some contracts like these have been rolled will surely only damage the risk assessment banks hold of these exporters. The harvest finished much quicker than expected, and unfortunately, some Peruvian contracts had to be rolled to Honduras ones, the exact reverse of what had happened earlier in the year.
September – Brazil
During our summer in Europe, all eyes monitor what is going on in Brazil and how the harvest was progressing. Typically if you make it through July without a frost in Brazil, the likelihood of one happening after drops considerably. However, this year, towards the end of August and even sliding into September, talks around frost continued to contribute towards the narrative, and many people sensed a fragile market that was very susceptible to any negative news coming out of Brazil. Frost always piques our interest more than dryness, but it was, in fact, dryness that was on the minds of coffee farmers in September: excessive dryness can cause premature flowering of coffee trees and reduce yields the next harvest. Would the rains come and help with the supply predictions for 2025? This would be a sizeable bullish signal to the roaring market that was accelerating. Unfortunately they would come, but a little later than hoped.
October – Vietnam
Brazil was not the only place that was suffering from dry weather. Fears around rain were also present in Vietnam and everyone was waiting for some moisture to come. Robusta coffee prices slid over the month of October in anticipation of more volume arriving but there was a bit of anxiety that excessive dryness in Vietnam could damage coffee crops and curb future global robusta production. The Vietnam Coffee Association said that Vietnam’s 2023/24 coffee exports would drop -20% y/y to 1.336 MMT. Reduced coffee exports from Vietnam, the world’s largest robusta coffee producer, didn’t produce a price surge in October but it was on everyone’s minds. Who would have thought that Robusta would surpass 200 US c/lb in 2024? Would it hit 250? The rains did eventually come but they came fast and talks quickly pivoted from “When would it rain?” to “Can we deal with this much rain?” and this was indeed supportive to pricing in November.
November – Ethiopia
Over a decade ago, Ethiopia launched a few large-scale changes to the way they process and export coffee. When it launched the Ethiopia Commodity Exchange (ECX) in 2008, many people were rightly excited about the positive impact it could bring to farmers’ lives, especially through the streamlining of payments “T+1” clearing and settlement system, as in the producers are paid a day later. While it was not embraced by the speciality side of the industry as there challenges around traceability, it did have some positive impacts. In November, although it was not as big a change as the ECX’s establishment was, the foundation of the National Coffee Stakeholder Engagement Platform, was indeed something that had taken into account the concerns voiced by about the ECX when it was launched. You can read more here. Let’s hope this helps maximise the value of this special origin.
December – Brazil
Of course, if any origin would have a part 2, it would have to be Brazil! As we were hoping for a white Christmas in Europe, the weather in Brazil was still proving sub-optimal and many organisations lowered their estimates for the 2025/26 crop. Volcafe predicted a global deficit of 8.5 million bags which would make it the 5th consecutive year of deficits. And this definitely produced a spike to the upside.
This increase had been forecast (by the USDA) despite supposed increases in production for the big coffee producers of Colombia and Indonesia. Any hope of the market cooling off before Christmas quickly dissipated: we finished the year with a bullish market and concerns about both global supply and demand of coffee weighed heavily on everyone’s minds.
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