Our July origin report highlights Guatemala as people throughout the country’s coffee industry look ahead toward the coming 2022/23 coffee year. The Central American country has faced many of the same challenges experienced by coffee origins worldwide, resulting in speculation of rising prices in the coming year and projections of a lower total harvest volume for 2021/22’s crop. Globally, the C Market dips below $2.00 / lb for the first time this calendar year after the ICO Composite Indicator Price gained steadily through June. Read on for our look at the C Market, a report of statistics from the International Coffee Organization, and news, numbers, and projections from Guatemala for the current and upcoming coffee year.
The World Market
C-Market Analysis
Source: Tradingview
Throughout June and the early part of July, the market maintained a similar level to what has been seen since March, trading consistently between $2.15 and $2.40 / lb despite single-day volatility as high as 10 cents. July 11–14 saw notable losses over three of the four days, with the market falling as low as $1.95 / lb, dipping below the $2.00 mark for the first time since November 9, 2021. At the time of writing (July 15), the market sits just below that $2.00 level. It is yet to be seen if the market will spring back and maintain trading between $2.00–$2.40 /lb as we’ve seen since March, or if this most recent dip will precede a period of lower prices seen on the exchange.
Global Coffee Industry Statistics
Source: ICO Coffee Market Report, June 2022
- The ICO Composite Indicator Price (I-CIP) gained 4.5% from May to June 2022, averaging 202.46 US cents/lb for June.
- Intra-day volatility of the I-CIP increased 0.5 percentage points between May and June 2022, reaching 11.0%.
- The New York certified stocks decreased 11.2% from the previous month, closing in at 1.03 million bags whilst certified stocks of Robusta coffee reached 1.76 million bags, representing an increase of 2.9%.
- Global exports of green beans in May 2022 totalled 9.75 million 60-kg bags, compared with 8.8 million bags in the same month of the previous year, up 10.7%.
- The latest provisional outlook for total production in coffee year 2021/22 remains unchanged at 167.2 million bags, a 2.1% decrease as compared to 170.83 million bags of the previous coffee year.
- World coffee consumption is still projected to grow by 3.3% to 170.3 million 60-kg bags in 2021/22 as compared to 164.9 million for coffee year 2020/21. In 2021/22, consumption is expected to exceed production by 3.1 million bags.
At Origin
Harvest in Numbers and Statistics
Guatemala’s coffee production for the 2021/22 coffee year faced many of the same difficulties as we’ve reported on in several of our recent origin reports; lower harvest volumes, rising costs of production, a dwindling workforce, and international logistics strain continue to impact coffee producing countries around the globe. While we are still waiting for official harvest numbers from Anacafé (The National Coffee Association of Guatemala) for the 2021/22 harvest season, it is projected that the country saw an 8% decrease from their total of 4,764 million quintals (equivalent to 3,652,400 bags of 60 kg) produced in the previous coffee year. Climate played a notable role in this decreased volume, as heavy rains during both the flowering and harvest seasons impacted cherry development and ultimately forced mature coffee to fall from the tree before being harvested.
Though production is lower this year, Anacafé reports that 87% of Guatemala’s green coffee exports are classified as SHB (Strictly Hard Bean), implying that the significant majority of the coffee grown by the nation’s producers is grown at high altitudes (1370+ meters above sea level) and is of high quality. Looking at the final destination of Guatemalan coffee, Anacafé reports that 50.1% of all exports ship to North America (including 39.1% of all Guatemalan coffee produced being consumed in the US), 23.7% ship to Asia, and 23.5% of all exports arrive in Europe.
Expectations for the Coming Year
Looking beyond the numbers, it appears that Guatemalan coffee producers have difficult decisions to make as they look toward the next harvest. A significant challenge is a lack of labor for tasks at the farm spanning the entire production cycle. This year, labor shortages resulted in some producers needing to choose between production tasks like weeding and fertilizing their plants, though the decision was already made for others as skyrocketing fertilizer prices have made some usual agricultural inputs inaccessibly expensive. A major contributor to the shrinking workforce is increasing migration of Guatemalan people to the US. Many of these people help to support their family members in Guatemala by sending money back home; these remittances constitute one of Guatemala’s main sources of income, according to Christian Safie of Unitrade, one of our sourcing partners in the country. Uncertainty is high for Guatemala’s coffee industry as some projections for the 2022/23 harvest anticipate a 5% increase in volume, while others speculate that we could see a similar or even lower total yield compared to this year.
Cupping coffee with Unitrade in Guatemala
Unitrade and some coffee producers in Guatemala report that the rising prices of fertilizer and other supplies will impact the price of coffee for the coming 2022/23 harvest as the cost of production in the country has doubled compared to previous years. However, with these growing costs, it is also very likely that many producers will be forced to forgo their typical fertilizer applications and other costly practices, which could result in smaller harvest volumes and/or lower quality crops.
As we look ahead from a sourcing perspective, it’s important to note that many producers and others in Guatemala are hesitant to commit to futures contracts at the present time considering several factors. The significant volatility seen in the C Market over the past year, uncertainty about next year’s harvest totals, and growing cost of production figures make it difficult if not impossible to predict fair pricing for next year’s crop so far in advance.
Future Outlook for Ally Coffee in Guatemala
While there are questions to be answered for what the coming year will look like for Guatemala’s coffee professionals, we will face these difficulties alongside our partners at Unitrade and the many producers they work with in the country. Abraham Castro, Ally Coffee Central America Green Coffee Buyer, explains, “The beauty of coffee is that every year we have new challenges and we are sure that together with Guatemalan farmers we will overcome these great challenges.”
Green coffee cherries in Huehuetenango, Guatemala
This year, we’re proud to continue our partnership with Unitrade in sourcing our Ceiba Core Coffee from smallholder producers across the Huehuetenango region. Ceiba is sourced from nearly 2,000 producers, the majority of which operate small farms of around one-fifth of a hectare, including 500–1,000 coffee trees and producing up to five bags of coffee each. This Core Coffee offering is a wonderful example of a community lot coffee; coffee is grown by many members of a community across several areas in Huehuetenango, with our sourcing partner Unitrade working to benefit each community through agronomic training and support for producers and through their Coffee Care NGO which works to address education, nutrition, and health in order to better support the coffee producers in this region. Learn more about sourcing Ceiba Core Coffee and our partnership with Unitrade on our blog.