June was a busy month for us at DRW: kicking off with a visit to Rwanda, followed by World of Coffee in Athens and rounded out with our annual Full Circle event here in London last week. It was good to catch up with so many of our partners from Origin and home alike; but we’re back at our desks now ready to dish out your monthly dose of origin-related news. But before serving you some updates from Colombia, Nicaragua, and Ethiopia we have an entrée of the latest from closer to home.
The Green Coffee Association stopped publishing it’s monthly report on U.S. green coffee stockpiles abruptly in June leaving a gap in the statistics many importers, traders, green buyers and the like rely on (Daily Coffee News). Similar organizations in the EU and Japan continue to publish similar reports, although the European Coffee Federation recently moved to publishing their report every other month.
The sterling hit its highest rate against the U.S. Dollar for a year at 1.28 on the 18th of June before settling down closer to the monthly average of 1.265. Not long after the peak the Bank of England announced a higher-than-expected hike in interest rates from 4.5% to 5% as core inflation continues to rise in the UK (BBC).
World Coffee Research also published a white paper on the investment gap necessary to continue innovating to maintain green coffee diversity and quality (WCR). They estimated a need for an additional $450 million per year to help with agricultural research & development to increase productivity and combat the effects of climate change.
Coffee Origin Focus
Colombia
A lot of attention has been paid to Colombian coffee recently – with crop estimates fluctuating weekly in such temperamental weather. The Federación Nacional de Cafeteros de Colombia (FNC) reported a 21% decrease in coffee production in May compared to last year. The year-on-year drop has been attributed to rainfall during the harvest period, along with below-average temperatures leading to longer maturation times for the coffee cherries.
Improved weather conditions lately have led to an estimated 2.7% increase in coffee production for the 2023/24 market year. Many are expecting this year to mark the change from the La Niña Pacific weather pattern to El Niño, bringing dryer conditions with it. Colombian differentials remain low despite recent movements, it remains to be seen if they will hold at this level which has been attributed to lack of demand in the first half of the year.
Nicaragua
Nicaraguan coffee production for the 2023/24 market year is mostly expected to remain the same at around 2.5 million bags. The change to the El Niño weather pattern in the pacific is likely to bring dryer conditions later in the year which may cause estimates to be revised. As well as natural weather patterns, climate change remains a concern in Nicaragua with increased frequency and severity of extreme weather events causing irreparable damage to agriculture.
Migration of labourers in Nicaragua also remains a concern, with an estimated 200,000 people or 4% of the population leaving in 2022 due to the current political and economic climate in Nicaragua. Many of those leaving are from poorer economic backgrounds and were likely in the pool of seasonal agricultural workers necessary for the harvesting of coffee.
On a more positive note, fertiliser prices have drastically reduced since the highs last year caused by the Russo-Ukrainian conflict. This will bring some much needed relief to coffee farmers in Nicaragua who have had to absorb high input prices for the last couple of years. We are unlikely to see the reduction in fertiliser costs affect the coffee production this year, as the effect of under-fertilisation of the coffee trees is likely to continue until the next.
Ethiopia
Fresh crop Ethiopians specials have recently landed with us in the UK, and hopefully will be making their way to a coffee shop near you soon. Coffee is the most important export for Ethiopia – generating an estimated 30-35% of total export earnings. This market year Ethiopia’s coffee production is estimated to reach 8.27 million bags, with the production for the 2023/24 market year already forecasted to be larger at 8.35 million bags.
The Ethiopian Institute of Agricultural Research also recently announced its plans to bring new and improved coffee varietals to coffee farmers in collaboration with World Coffee Research and CTA. This will hopefully bring further increases to production and quality in the years following, as well as providing resistance to climate change and disease for many producers in Ethiopia.
