Our May origin report returns its focus to Brazil as the early stages of this year’s harvest are beginning. We check in for updates from some of our partner farms throughout the country, and take a look at the latest volume projections for this year’s crop. Globally, we examine recent volatility in the C Market, the latest update from the International Coffee Organization, and ongoing logistics stressors that continue to impact global trade significantly.
The World Market
C-Market Analysis
Source: Tradingview
Since our April report the C Market has generally shown downward movement with high levels of volatility. After strong upward momentum in the early part of April that brought the market as high as $2.37 / lb, prices began to tumble on the 12th of the month. The market recovered eight cents on April 21, continuing to trade between $2.15 and $2.25 until May 5. Beginning on May 5, prices fell for four consecutive days to reach as low as $2.02 / lb before springing back nearly 8% on May 11 to the $2.20 level. The market would then see another substantial price rise on May 16, gaining another 12 cents. However, at the time of writing this on May 18, volatility in the market shows no signs of slowing as the day closed down more than 4% to lose 9 cents. With relatively few outliers, the market continues to trade in the range of $2.10–2.30 / lb we’ve seen since early March.
Global Coffee Industry Statistics
Source: ICO Coffee Market Report, April 2022
- The ICO Composite Indicator Price gained 1.8% from March to April 2022, averaging 198.37 US cents/lb for the month.
- Global exports of all forms of coffee totalled 13.16 million bags in April, up 4% from the previous year. This increase is largely due to exports from Asia & Oceania, which showed a 19.4% rise over the previous April to total 5.03 million bags shipped.
- The latest outlook for total production in coffee year 2021/22 (October–September) remains unchanged at 167.2 million bags. World consumption for the coffee year is projected to grow by 3.3% to 170.83 million bags, leaving a production deficit of 3.1 million bags.
- Certified stocks of Arabica and Robusta coffee both dipped in April, totaling 1.2 million and 1.56 million bags respectively.
- Global exports for the coffee year to date are down 1.4% compared to the same period the previous year. This is primarily due to a decrease in shipments of Colombian Milds and Brazilian Naturals, which are down 10.5% and 11.5% respectively.
This section was sourced from the ICO unless otherwise indicated. Read the ICO’s full April 2022 report here.
At Origin
Harvest in Numbers and Statistics
Brazil’s harvest for the upcoming 2022/23 coffee year is currently projected at 61.1 million bags, including 38.3 million bags of Arabica and 22.8 million bags of Robusta; this projection represents an 8% recovery from the current coffee year. This recovery is good news following the threats to production volumes faced by producers in Brazil this year due to adverse weather conditions, which included both drought and damaging frost in some producing regions. However, crop year 2022–23 is supposed to be the bumper crop in Brazil’s biennial harvest cycle, and the projected 61.1 million bags will still fall 12% short of the recorded numbers from the previous bumper year in 2020–21.
Harvest has already begun in some regions including Oeste Baiano where Fazenda Mimoso—part of Ally’s parent company, Grupo Montesanto Tavares—is located. For much of the rest of the country, harvest will begin in earnest later this month and in June. As the beginning of the harvest season comes to all of our partners in Brazil, our team in the country will continue watching the weather as Autumn turns to Winter, bringing with it strong winds, cold and dry conditions, and frost in low altitude areas.
Updates from Brazilian Partner Farms
Fazenda Dois Irmãos
Under the management of coffee producer Maria Gabriela Baracat Sanchez, Fazenda Dois Irmãos has earned the Regenagri certification ahead of this year’s harvest for their work in regenerative agriculture. With a focus on producing high quality coffee with deep respect for the environment, Maria Gabriela and the whole team at the farm are now recognized as the second coffee producing farm to carry the certificate. We’re proud to celebrate their accomplishment and highlight their success; congratulations to everyone at Fazenda Dois Irmãos!
Maria Gabriela Baracat Sanchez at Fazenda Dois Irmãos in Cerrado Mineiro, Brazil
Grupo Montesanto Tavares Farms
This coming harvest marks our second season with Fazenda Mimoso in the Oeste Baiano region as part of Grupo Montesanto Tavares, Ally’s parent company. While most regions of Brazil can expect to begin their harvest at the end of this month or later, the state of Bahia where Mimoso is located has an earlier harvest period than most due to its warm climate. Harvest at Fazenda Mimoso is already well underway and we’re looking forward to the results of this year’s crop.
The coffee trees on Fazenda Primavera in Chapada de Minas are full of ripening fruits with harvest expected to begin in the last week of May. With just weeks left before harvest, the team at Primavera is hard at work monitoring cherries, noting the percentages of ripe cherries and total sugar content in the fruit. These measurements will be used to determine not only which coffee varieties and plots of land are ready to be harvested first, but also to inform the best processing method for each lot. We’re looking forward to another productive harvest for our partners at Fazenda Primavera and excited to begin sampling and selecting lots to offer to our many roaster partners worldwide.
Harvesting coffee cherries at Fazenda Primavera in Chapada de Minas, Brazil
International Logistics Problems Continue
Congestion in international ports continues to slow the shipment of coffee from producing countries around the world. COVID-19 lockdown in Shanghai has caused significant effects at other ports throughout Asia, further tightening the bottleneck for container ships. At the port of Ningbo, the world’s third-busiest container port, average ocean volumes have risen 14% as ships are diverted from Shanghai. Meanwhile, ships still waiting to be processed at the Shanghai port are experiencing dwell times over 12 days for imports.
European ports have also slowed due to disrupted trade routes between Asia and Europe as well as the ongoing invasion of Ukraine. Rotterdam and Antwerp, Europe’s two largest ports, saw decreased throughput volumes of 1.5% and 11.6% respectively. Significant congestion in the port of Hamburg has led carriers to begin re-routing ships to alternate ports to avoid even greater delays.
Raised drying beds at Fazenda Alto Sereno in Caparaó, Brazil
US ports have adjusted somewhat to increased shipment volumes from Asia, though transit times are at a near-record high. Current travel times for goods from Asian to US warehouses averages 111 days, more than double the transit time needed for the same journey in 2019. Rail containers are also seeing increased dwell times at port, with CSX President and CEO Jim Foote expressing that increasing the number of engineers and conductors is the only solution to returning to their pre-pandemic efficiency. As some carriers divert their vessels from Californian ports that have frequently seen greater delays than their east coast counterparts, data from MarineTraffic shows that there is now a greater backlog of containers waiting to be unloaded on the east coast than on the west.
Future Outlook for Ally Coffee in Brazil
As we look ahead at the harvest that’s just beginning in Brazil, we’re excited to see what the year holds for our many partner farms throughout the country. The most recent harvest brought opportunities for us to establish new relationships and build on longstanding partnerships which allowed us to further expand our Brazilian offerings, and our team in Brazil is looking forward to continuing that work this year.
We’re also excitedly anticipating our upcoming Champ Trip to Brazil! As the official Origin Trip Sponsor for the World Coffee Championships’ Barista, Brewers, Cup Tasters, and Roasters competitions, we look forward to each one of these trips as an opportunity to bring together coffee professionals from a variety of backgrounds and open up opportunities that move coffee forward. This year’s trip will take us to Brazil, where we’ll visit several of our partners including Fazenda Bela Epoca and Fazenda Minamihara, as well as Fazenda Primavera and our exporting partner Cafebras who are part of Ally’s parent company, Grupo Montesanto Tavares. Look forward to more content in the coming months highlighting the trip, our participating partners, and the champions from around the world who will be joining us!