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Origin Report - Costa Rica

Our June Origin Report returns our attention to Costa Rica as the last of our containers of coffee from the country are being loaded onto ships to sail to their final destinations. The 2021/22 harvest in Costa Rica marks the beginning of a new chapter for Ally Coffee in Central America with the opening of our new sourcing office in San Pablo de León Cortés and the addition of Abraham Castro as the new Green Coffee Buyer for Central America and Mexico, creating more opportunities for us to connect directly with many of our partners throughout the region. Read on to get an update on the C Market’s movement, facts and figures from the International Coffee Organization, news from Costa Rica’s harvest, and the latest developments for our team in Costa Rica.

The World Market

C-Market Analysis

C Market candlestick chartSource: Tradingview

Since March the market has traded more consistently than in the preceding months, now looking to have settled into the $2.00–2.40 trading band since late Q1. Following the lowest recent price of $2.03 seen on May 10 the market has experienced days of significant volatility, with single-day price fluctuations as large as 15 cents. However, despite this volatility, it can be said that the market is trading sideways. Sharp rises and drops have both been purchased or sold off quickly by quickly, creating strong support and resistance levels in the aforementioned ranges.

Looking at the chart with more historical scope we can see that the market is still trading relatively high, in a price range not seen since 2014. As most coffee-consuming countries are experiencing decade-high inflation and international logistics problems for consumers remain unsolved, it is now assumed by many that the price seen on the C Market today may be here to stay for some time to come. Nothing is ever certain in the market however, and many people will be paying close attention to the development of the upcoming Brazilian harvest to try to predict its impact on global coffee prices.

Global Coffee Industry Statistics

ICO composite indicator price chartSource: ICO Coffee Market Report, May 2022

  • The ICO composite index growth has stagnated along with the C-market and closed the month of May 2.4% lower at $1.9371 / lb. 
  • Exports reached 69.67 million bags in the first seven months of coffee year 2021/22, a decrease of 0.9% as compared with 70.28 million bags for the same period in coffee year 2020/21.
  • In the first seven months of coffee year 21/22 the exports from South America & Africa dropped significantly by 12.7% and 10.1% respectively. 
  • The New York certified stocks lost 3.3% from the previous month, closing in at 1.16 million bags while certified stocks of Robusta coffee for London reached 1.71 million bags representing an increase of 9.6%.

ICO certified stocks chart

This section was sourced from the ICO unless otherwise indicated. Read the ICO’s full May 2022 report here.

At Origin

Harvest in Numbers and Statistics

Following a year of much uncertainty and many changes to harvest estimates by ICAFE (Instituto del Café de Costa Rica), the 2021/22 Costa Rican harvest totaled 1,671,176 bags of 46 kg (equivalent to approximately 1,114,117 bags of 69 kg, a common full bag size for export). This number represents an 11.42% decrease in production compared to the 2019/20 coffee year, the previous low-harvest year in Costa Rica’s biennial crop cycle. While many anticipated a smaller harvest this season, the double-digit percentage decrease came as a surprise to most. As a result, green coffee buyers saw a relatively short supply of available coffee for new contracts following the harvest as many mills and cooperatives were working hard to fulfill previously negotiated contracts with the cherries they were able to secure.

The average price for all Costa Rican coffee reported by ICAFE this harvest was $2.53 / lb FOB. The price takes into account all of the regions, differentials, and coffee types across Costa Rica. This figure is one of the highest averages recorded in the country, which is likely due to the fact that differential prices held strong while the trading level of the C Market rose. Another contributing factor is likely the low harvest volume, which prompted higher purchase prices for coffee cherries as companies sought to fulfill their contracts.

Loading coffee into a shipping container in Costa RicaPictured left to right: Luis "Tachito" Castro Vindas of Juanachute Micromill, Ally Coffee Central America & Mexico Sourcing Manager Abraham Castro Vindas, Ally Coffee Specialty Coffee Sourcing Manager Bram De Hoog, Costa Rican coffee professional Remy Molina loading coffee into a container for shipping.

International logistics continues to present challenges to people across the coffee industry, and Costa Rica is no exception. As bookings continue to be rolled onto later ships many exporters are left with little certainty about when a container will depart until the ship has finally left port. As of the beginning of June, ICAFE reports that 52% of the harvest has been exported.

Updates from our Central America Sourcing Office

The last year has brought about important changes for Ally Coffee in Costa Rica, including the relocation of our Central America & Mexico sourcing office into the Tarrazú coffee region. Many of our Costa Rican partners are based in Tarrazú, and this relocation allows us to be nearer to them, working in closer contact and collaborating even more efficiently. After moving to our new space in San Pablo de León Cortés, this office has already been home to many tastings and conversations with producers as our Central America sourcing team, now led by Abraham Castro, worked to select coffees for roasters around the world.

A view of Tarrazú and Vista del Lago MicromillA view of Tarrazú and Vista del Lago Micromill

This coffee year has also seen our Costa Rican offerings diversify as we were able to source coffee from the Brunca region for the first time. We’re proud to partner with Don Senel Micromill and Cerro Buena Vista Micomill—both located on the slopes of Chirripó, Costa Rica’s highest mountain—to offer coffees that impressed our sourcing team with their quality and cup profiles.

The year was not without its own difficulties however, as the season’s small harvest and relatively high prices applied pressure to coffee buyers across the country. Finding a balance between the needs of producers and roasters can be a challenge even in the best of times, but is a critical consideration when sourcing coffee in a harvest year like the one Costa Rica has had. However, despite this test, our sourcing team has done an exceptional job at overcoming the difficulties and finding ways to continue growing our relationships with our many partners.

Coffee being dried on raised beds at Don Senel Micromill in the Brunca region of Costa RicaCoffee being dried on raised beds at Don Senel Micromill in the Brunca region of Costa Rica

Future Outlook for Ally Coffee in Costa Rica

As our final containers from Costa Rica are afloat to their destinations, we’re excited to look forward to the next harvest and the months leading up to it. With our new location so close to many of our Costa Rican producer partners, we are already finding ways to support them in their work and coordinating training opportunities on skills like cupping and green coffee preparation, as well as opening our space for agronomists and other professionals in the sector to offer their own trainings.

As our final containers from Costa Rica are afloat to their destinations, we’re excited to look forward to the next harvest and the months leading up to it. With our new location so close to many of our Costa Rican producer partners, we are already finding ways to support them in their work and coordinating training opportunities on skills like cupping and green coffee preparation, as well as opening our space for agronomists and other professionals in the sector to offer their own trainings.

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