The World Market
C-Market Analysis
Source: Tradingview
Since our last report, the C-market has continued a steady downward trend. Although this cannot be attributed to a single cause, the general opinion is that favorable weather patterns in Brazil are contributing significantly to the market's falling price. No frosts have been reported in the country, and the likelihood of frost decreases drastically after mid-July. At the time of writing (July 13), the market has only closed positively five times since June 16, each followed by price drops. The market is currently trading at $1.58/lb, down almost 20% from the $1.95/lb high in early June.
Global Coffee Industry Statistics
Sourced from the International Coffee Organization unless otherwise noted. Read their full June 2023 Coffee Market Report here.
- The ICO Composite Indicator Price (I-CIP) lost 2.4% from May 2023 to June 2023, averaging 171.25 US cents/lb for the latter, as a consequence of a decreasing differentials across the board.
- Average prices for all group indicators decreased in June 2023, with Robusta being an exception and continuing its gains at 7.8%, averaging 132.13 US cents/lb
- The New York certified stocks decreased another 8.5% from the previous month, closing in at 0.60 million 60 kg bags, while certified stocks of Robusta coffee reached 1.25 million 60 kg bags, representing a decrease of 9.7%
- Global green bean exports in May 2023 totalled 9.56 million bags, as compared with 9.61 million bags in the same month of the previous year, down 0.6%
- World coffee production decreased by 1.4% year on year to 168.5 million bags in coffee year 2021/22; however, it is expected to bounce back by 1.7% to 171.3 million bags in 2022/23.
- World coffee consumption increased by 4.2% to 175.6 million bags in coffee year 2021/22. It is expected to increase by 1.7% to 178.5 million bags in coffee year 2022/23. 2/23.
- As a result, the world coffee market is expected to undergo another year of deficit, with an estimated shortfall of 7.3 million bags in coffee year 2022/23
At Origin
Harvest in Numbers and Statistics
The main harvest for the first half of the year is underway in the southern regions of Colombia, including Nariño, Cauca, and Tolima. Coffee producers are still feeling the effects of La Niña, which has impacted production volumes across the country due to the heavy rains it brought during the flowering period in August, September, and October of 2022. Some regions like Tolima have seen dramatic impacts on production volumes, as the region reports a harvest reduction of 30% compared with historical averages. Yeferson Olaya, one of our producer partners at Finca La Cinta in Tolima, tells us, “the [recent] harvest was shortened and the yield dropped dramatically. We were only able to produce around 900 kg of parchment coffee per hectare, which is only 60% of what we have been used to harvesting in previous years.” Additionally, harvest periods throughout the country have been slightly off from their usual schedule; in Cauca, Huila, and Nariño a harvest peak expected in May–June arrived in the first quarter of the year. “This year the harvest is very scattered; in the high altitude zone we had collection during February and March. This is something we haven’t seen for a long time, we’ve always been used to harvesting between June and July,” says producer and exporter Jose Gomez of Finca Paraiso and Promotora Café de Altura in Nariño. “All of this is the effect of climate change due to global warming.”
Jose Gomez (right) with Pablo Guerrero, owner of Hacienda El Obraje, at the Ally Coffee booth at Specialty Coffee Expo 2022
In June, production totals for the year reached just over 5 million bags of 60 kg, 408,000 bags fewer than the same period last year representing a decrease of 7.5% for the nation. Now that La Niña has subsided, climate conditions are much more favorable for producers and there has been good flowering ahead of the main harvest that will come for other regions in the second half of the year. Total annual production for 2023 could be above 11.5 million according to current predictions, though official estimates from the Federación Nacional de Cafeteros de Colombia (FNC) won’t be published until August or September.
Coffee exports from the country are also down through the first half of 2023 compared to the same period last year, with approximately 4.25 million bags shipped compared to 5.85 million. This steep decrease can be somewhat attributed to falling prices for Colombian coffee. The C Market price is trading more than 20% below where it was at this time last year, and the internal price in Colombia has decreased in the last two months as differentials have fallen from +60 cents per pound to +15–20 cents. Further, a shifting exchange rate for the Colombian Peso (COP) has applied additional pressure on the country’s coffee growers as the local price has reached as low as $1,300,000 COP per 125 kg, a level not seen since 2021. “We are very concerned. With sales prices below $2,000,000 pesos per load it is very difficult to get a good profit. Production costs are very high and productivity is low,” says Yeferson Olaya.
Yeferson Olaya sample roasting coffee for quality control at Finca La Cinta in Tolima, Colombia.
While production volumes and sale prices are down, inflation continues to bear down on Colombia with a 12.13% rate reported by the Departamento Administrativo Nacional de Estadistica (DANE) at the end of June. Costs of production and general costs of living have maintained their high levels as well, adding additional concerns for coffee growers. As agricultural inputs maintain their high prices despite the drop in the COP/USD exchange rate, producers could see limited access to fertilizers in the short term, setting themselves up for a slow recovery in their farms’ productivity. When taking all of this into consideration, the year seems like it could be a challenging one for Colombia’s coffee producers.
Visiting partners in Huila
In May, Green Coffee Buyer Gabriel Restrepo and Creative Projects Manager Nick Castellano visited our partner and friend Rodrigo Sanchez in Huila, Colombia. Rodrigo has established himself as a benchmark example for specialty coffee production in Colombia through his work, telling us, “From a very young age I understood that to be successful in the world of coffee you have to produce quality and always target specialty markets. For a producer in Colombia it is very difficult to make a profitable business by selling commercial coffee, we do not have the tools or the resources for that business model.”
Despite the challenges that climate change has brought to producers throughout the nation and beyond, Rodrigo remains calm and optimistic. Throughout the years he has focused on developing strong relationships with clients in various markets, helping to ensure regular demand for his coffees. "Our objective is to create relationships with strategic clients and take care of that relationship so that it lasts for many years and this is done with seriousness and transparency,” he says.
Rodrigo Sanchez (left) chatting with Colombia Coffee Buyer Gabriel Restrepo during a recent visit.
Currently, Rodrigo produces coffee on five farms alongside his wife, Claudia Samboni. Through his work he has also partnered with childhood friends, including Elkin Guzman of Finca El Mirador, and Fabian Murcia with whom Rodrigo recently acquired Finca Las Guineas. This new property will be home to an ambitious new project which we’ll have more news on very soon.
For Nick Castellano, this was one of his first trips in his new role at Ally. His work will help us bring producers closer to consumers through video and other media, bridging the gap between the ends of the supply chain. "There is a lot to tell about the daily life of a producer; something new is always happening on a farm and the best way to understand it is to live it so that it can be clearly transmitted to the rest of the chain," he tells us.
Pictured left to right: Colombia Coffee Buyer Gabriel Restrepo, Creative Projects Manager Nick Castellano, coffee producer Rodrigo Sanchez pictured during a recent visit to Rodrigo's operations.
Ally Coffee in Colombia
Our operations in Colombia continue to grow, expand, and evolve, and we’re excited to announce a new office opening soon in Medellín. We chose this location for its strategic placement, allowing us to generate greater integration between the many regions we work in throughout the country. We look forward to being able to efficiently explore new partnerships throughout the country, growing the diversity of offerings available to roasters around the world.
We’re also excited to return to Producer & Roaster Forum Colombia, September 14–15 in Medellín! We’re proud to be a Bronze Sponsor of the event, and look forward to two days filled with cuppings, panels and presentations, and the opportunity to be part of connecting producers and roasters directly at origin.
We currently have a number of Colombia offerings afloat and scheduled to sail soon hailing from Huila, Nariño, Caldas and more. Contact your account manager to find out what’s coming to your area and get a headstart on finding your next Colombian offering!