In this month’s origin report we look at Costa Rica as the harvest is underway at lower altitude farms and is about to begin throughout the majority of the country. This year marks the fourth harvest for Ally Coffee’s office in Costa Rica, and in this report we will preview what to expect from the team on the ground in coffee year 2021/22. Read on for those notes from Costa Rica, as well as our usual reporting on the performance of C Market as well as global data from the International Coffee Organization.
The World Market
C-Market Analysis
Source: Tradingview
During the last month, the C Market traded in a relatively narrow range of $2.15 to $1.97 with a volatility of approximately 8.5%. This period of relatively low volatility came to an end on Friday, November 12 when the market broke its latest resistance line, climbing to close at $2.19. The rally continued after the weekend, reaching as high as $2.28 to close Monday the 15th at $2.25/lb.
Global Coffee Industry Statistics
Source: ICO Coffee Market Report, October 2021
- The ICO composite indicator price reached an almost ten year high of 181.57 US cents/lb in October 2021, increasing more than 70% from the previous year.
- Total shipments of all forms of coffee in coffee year 2020/21 amounted to 129.03 million bags, an increase of 1.3% over coffee year 2019/20.
- Global coffee consumption for coffee year 2020/21 is estimated at 167.15 million bags, an increase of 1.9% over coffee year 2019/20.
- Total production in coffee year 2020/21 is projected at 169.64 million bags, representing a marginal increase of 0.4% compared to the previous year.
- Total production in coffee year 2020/21 is 8.6% higher than the average production of the 10 years before it. However, concerns over coffee supply from important origins continue to characterize market conditions as climate-related shocks, COVID-related disruptions, and challenges across the logistics industry continue to affect global trade in many countries.
Read the ICO’s full October 2021 report here.
Green coffee cherries at Los Ureña in Tarrazú, Costa Rica
At Origin
Costa Rica Pre-Harvest Report
The weather leading up to the harvest in Costa Rica this year has been favorable and without any major events so far. However, estimates by ICAFE (Instituto del Café de Costa Rica) as well as reports from our producer partners indicate a significantly smaller crop—15–30% smaller—compared to last year's harvest. This decrease could be attributed to some of the hardships experienced last year such as the hurricanes that fell across Central America or possible damage to coffee plants that could have been caused by less experienced pickers due to the difficulties in finding more experienced harvest workers during the height of the COVID-19 pandemic.
Harvest began a bit earlier than usual this year, with 8% of the year's crop already reported compared to 4% at the same time last year according to ICAFE. This moving of the harvest timeline is expected to continue in the coming weeks, with most mills across the country beginning operations in early December. Currently it appears that we could expect to start shipping coffee from this year's harvest in March, assuming no unexpected delays.
Freshly harvested coffee cherries at El Roble farm in West Valley, Costa Rica
In total it's projected that Costa Rica will produce 1.2 million 69 kg bags of coffee this year, of which the majority will be exported. Just over 50% of this total has already been sold through forward sales which were agreed to over the last three years. In terms of conventional coffee, differentials have remained strong despite the turbulent C Market price. Many of the largest domestic players in the market are confident in the demand for Costa Rican coffee and do not intend to lower their prices.
This strong pricing for conventional coffee could have a notable impact on the availability and price of microlots from Costa Rica this year. Most microlots are produced by small and medium-scale producers operating their own micromills. These micromill operators usually process coffee from their own farms as well as the coffee from neighboring farms and family members. The high price of conventional coffee this year will make it very difficult for micromill owners to compete with larger mills to purchase cherries for processing. Furthermore, it's possible that some mill owners may not take on the risk of processing their own cherries and opt to instead take advantage of the high price for cherry available to them through the larger conventional mills.
In a recent visit, Ally Coffee's Central America Green Coffee Buyer Bram De Hoog spoke with our producer partner Eduardo Duran in Naranjo, West Valley, who shared his thoughts about this year's harvest.
“At first the harvest was looking very good due to the great weather experienced over the last months. However, now that people are starting to pick it is turning out to be of lesser volume than expected. The talk of the town is a mix of excitement because of the higher prices and worry about the yields; it is unfortunate the high prices come at times of a small crop, but that makes sense in a way.”
-Eduardo Duran
Statistics above sourced from ICAFE
Neatly planted rows of coffee at Aquiares Estate in Turrialba, Costa Rica
Ally Coffee in Costa Rica
We're excited to begin this fourth harvest season for our office in Costa Rica. As part of our continuous growth in Central America, we're happy to announce that we are relocating our Costa Rican office from the capital city of San Jose to San Pablo de Leon Cortes in the Tarrazu region. This move allows for our team to be even closer to our many partners throughout this principle growing region of the country. We're proud to work with a range of producers and millers throughout Costa Rica, and we look forward to continuing to create new partnerships as well as growing our relationships with our current partners.
Finally, we want to give a special mention to Tachito Castro of the Juanachute Micromill for his excellent performance at the World Barista Championship in Milan. His presentation was a unique opportunity for a producer to showcase their own coffee on the world stage. This is a shining example of the developments in the Costa Rican coffee industry, through which producers are expanding their knowledge into roasting, barista skills, and coffee shop operation. These developments continue to contribute to the innovation in the local coffee industry as well as to potential collaborations abroad.