February might technically be the shortest month of the year – but I’m sure most of us here in the UK can attest to its length. It’s been a long, cold, lonely winter; but the dog days are over and disregarding the odd cold snap, it feels like we’re finally out of the woods. Politically and economically, it was a relatively quiet month here in the UK. The biggest news to report was that the UK narrowly avoided dipping into negative growth in January (with GDP estimated to have grown by 0.3%), and that the government had a £5.4 billion spending surplus in January. Both announcements led to a brief rally in the pound – but remained relatively steady overall, bouncing between 1.19 and 1.23 GBP/USD as announcements across the pond kept us in check. But enough with the dull domestic news; join us as we dose out your monthly dose of origin-flavoured focus.
Coffee Origin Focus
One of the biggest international news stories to come out of Peru recently is the political protests in the wake of President Pedro Castillo’s ousting. Protesters have been calling for President Dina Boluarte, who replaced Castillo, to step down and for early elections to be held. Congress has yet to approve these requests, and demonstrations continue, especially in the south of Peru. The port of Callao in the south has been affected by strikes and blockades, but the northern port of Paita has continued to function without any major problems so far. The Peruvian Sol had hit a 30-year low against the dollar in 2022 at almost 4 Sol to the Dollar but rallied towards the end of the year and now sits around 3.77.
It’s not all bad news, though, as the Peruvian coffee crop is currently on track to be 10-15% larger than 2022. The weather so far has been favourable, and if the rain decreases in May, then the harvest should prove fruitful. It’s too early to make any solid calls on the crop so far, but it remains on track to be a good year for Peru.
Guatemalans are gearing up for elections later this year in June. Currently, there are 24 candidates who have declared themselves as standing but not all have been approved. The elections will continue over the summer, with a runoff for the top two candidates due to take place in September. Economically Guatemala is doing relatively well, and the currency remains mostly stable around the higher end of 7 – 8 Quetzal to the Dollar.
It has been a difficult year for coffee growers in Guatemala as the migration of workers to the US has left fewer people to pick the crop. Estimates of up to 400,000 workers migrating north are just one of the contributing factors for crop estimates falling by as much as 30% compared to 21/22. Fortunately, next year’s crop looks to be better but with late flowering, it is uncertain by how much.
The coffee harvest in Ethiopia has mostly finished with DRW’s naturals (taking longer to produce) due to arrive in the UK in May. Since 2020, intermittent droughts have kept crop levels low compared to years prior – but the current crop is still on track to surpass last year’s. However, trade remains low and CTA reports show only 8690 MT was exported in January. However, this drop in volume may counter-intuitively be better for quality. If the harvest is unexpectedly large, there often isn’t enough space for processing the coffees, especially the naturals, which can lead to uneven drying or even removal of the coffee before the drying is complete.
The Birr has been steadily devaluing against the Dollar over the past five years but looks to be plateauing lately – perhaps in the promise of more stability following the second ceasefire in Ethiopia’s civil war. However, a weaker Birr means that farmers get more for their crop as coffee is usually bought in USD – so the same price for their coffee as last year translates to more Birr. We have had pre-shipment samples in for most of our Ethiopian offerings and are looking forward to receiving the landings shortly.