Our February origin report returns our focus to Honduras as the harvest is ongoing throughout the country. The nation’s producers are working through rising costs of production and a dwindling labor force, though projections for both production volume and quality are positive this year. Globally, the C Market has rallied since our January report, and certified stocks of Arabica seem to have steadied for the time being. Read on for our look at the market, facts and figures from the International Coffee Organization, and updates on Honduras’ harvest from our Central America sourcing team.
The World Market
Source: TradingviewSince our last report, we have seen a steady increase in the price of coffee futures contracts traded on the New York C Market. The market has increased almost forty cents since the low of $1.44 on January 11, 2023, marking a 27.5% increase in just a month. Nevertheless, the reports we hear from the field in producing countries is that this is still considered a low market compared to the prices seen from November 2021 to November 2022. During that period, the market was less than $2.00 for just two days in mid-July 2022. Since the market slid below the $2.00 level in October we have found a new resistance point around $1.80, which prices are at again at time of writing. This critical point will show us if there may be a tendency to continue to rise from there or drop back down.
Global Coffee Industry Statistics
Sourced from the International Coffee Organization unless otherwise noted. Read their full January 2023 Coffee Market Report here.
- The ICO Composite Indicator Price (I-CIP) lost 0.1% from December 2022 to January 2023, averaging 156.95 US cents/lb for the latter. In January 2023, the I-CIP fluctuated between a minimum and maximum of 145.54 and 174.95 US cents/lb, whilst opening the month at 157.31 and ending January on 174.95 US cents/lb.
- The New York certified stocks increased by 4.3% from the previous month, closing in at 0.91 million 60-kg bags, whilst certified stocks of Robusta coffee reached 1.04 million 60-kg bags, representing a decrease of 3.8%.
- Global green bean exports in December 2022 totalled 9.81 million bags, as compared with 10.64 million bags in the same month of the previous year, down 7.7%.
- Shipments of the Other Milds decreased by 24.8% in December 2022 to 1.24 million bags from 1.65 million bags in the same period last year. This is the third consecutive month of negative growth for green bean exports of the Other Milds since the start of the new coffee year. As a result, the cumulative volume of exports fell by 17.8% in the first three months of coffee year 2022/23 to 3.54 million bags from 4.3 million bags over the same period in coffee year 2021/22. The latest downturn is primarily driven by Honduras and Peru, down 33.7% and 41.4%, respectively in December 2022 as compared with December 2021.
- Exports of all forms of coffee from Asia & Oceania increased by 4.2% to 4.59 million bags in December 2022 and were up 2.0% to 6.57 million bags in the first three months of coffee year 2022/23.
- Vietnam saw 16.4% growth to ship 3.38 million bags of coffee in December 2022.
- By contrast, India’s coffee exports fell 39%, shipping only 0.42 million bags in December. This decrease was to be expected following India’s record-breaking production year in 2021/22, during which 7.24 million bags were exported compared to 5.95 million bags in the previous year.
- Total production estimates for the previous coffee year (2021/22) remain unchanged at 167.2 million bags, a 2.1% decrease from the previous year.
- World coffee consumption is projected to have grown by 3.3% in 2021/22 to reach 170.3 million bags, up from 164.9 million in the previous year.
Harvest in Numbers and Statistics
All information sourced from Asociación de Exportadores de Café de Honduras (ADECAFEH) unless otherwise noted.
The 2022/23 coffee year has been fraught in Honduras as the country’s producers face many of the same challenges confronting coffee growers around the world. Despite these difficulties, official projections for the current 2022/23 harvest estimate 5.1 million bags of coffee produced, a 10% increase over the 4.7 million bags harvested in the 2021/22 season. As of February 10, 1.78 million bags of coffee from this harvest have already been sold, with 1.10 million bags already exported.
Pulped coffee at a COMICOVEL member producer's mill in Opalaca, Honduras
A primary challenge facing producers this year is significant cost of production increases, particularly for fertilizer. Some coffee growers are reporting fertilizer price increases of up to 150% over recent years, forcing many to make difficult decisions about how to care for their crops. Much of this cost increase can be attributed to the ongoing war in Ukraine, as much of the raw material used in these fertilizers comes from Russia which is still facing international sanctions. Some farmers were forced to forgo fertilizing their coffee, while others made the decision to fertilize only the most productive plots on their farm. The effects of these decisions have yet to be seen entirely with the harvest still ongoing, though some specialists speculate that we won’t see the true impact until the 2023/24 harvest. It’s become an increasingly common message recently, but with costs of production soaring and the C Market trading 27% below its price from this time last year, the financial outlook for coffee producers this year is a challenging one.
Coffee producers in Honduras are also facing a labor shortage, similar to what we’ve seen in other Central American countries like Guatemala over the last year. According to ADECAFEH, at least 350,000 pickers are required to harvest coffee across the nation’s 295,000 hectares of coffee production, with approximately 50,000 harvesters coming to work from neighboring countries. However, Honduran emigration to the United States is on the rise as people continue to seek better wages for their work and more opportunities for their families. Though an entire family may not emigrate, it is common for those who do to send money home to support their families, lessening the need for them to take on the challenging physical labor of coffee harvesting.
Pedro Sagastume (left) and Yerin Sagastume (right) in the drying area of their family mill in Santa Barbara, Honduras
Producers’ opinions on this year’s harvest projections are split, with some agreeing with the ADECAFEH estimate of 5.1 million bags while others believe that even reaching last year’s total of 4.7 million bags would represent a successful season. In speaking with Fidel Paz Muñoz of Exportadora San Vicente, one of our Honduran exporting partners, he tells us “one thing is the production in the [plant] and another thing is how much is collected and exported.” According to him, due to the dwindling labor force there’s a greater proportion of coffee cherries this year which aren’t being harvested in time and are ultimately falling from the trees, leaving those cherries unable to be processed and exported. The amount of loss due to this across the country is difficult to calculate, but could speak to the 400,000 bag difference in estimates made by different actors throughout Honduras.
Ally Coffee in Honduras
Looking ahead, we’re glad to report that our trading partners in Honduras have great expectations for the quality of their coffee production this year. Katia Duke of Finca San Isidro tells us that they’ve had good weather, creating great conditions for drying the coffee and advancing her harvest. We’re also excited to be bringing back coffee from COMICOVEL in Opalaca, one of our regular offerings highlighting the work of their many smallholder members. Lastly, we’d like to take this opportunity to congratulate our partner Benjamin Paz of Exportadora San Vicente for his recent Honduras Cup of Excellence win!
Despite the recent challenges in Honduras, it is a producing country in which we have a lot of faith. Our partners have shown a dedication to a combination of quality and certified coffees which can offer substantial value to roasters around the world who have embraced this origin as a staple in their coffee programs. We're proud to have grown tremendously in Honduras, and looking forward to continuing to expand our supply chains there for years to come.