Happy new year to all of our readers around the world. We hope 2022 brings you fortune in your coffee businesses and interests!
Our January Origin Report features Honduras, which continues to be the biggest coffee producer in Central America. We will look at country-specific statistics, hear from our producing partners COMICOVEL, and look ahead to what we can expect from Honduras at Ally Coffee this year.
The World Market
C-Market Analysis
Source: Tradingview
The C-market remains strong and continues to show a pattern of consistent growth. Lately, each dip is followed by the market finding support at a higher mark than its previous level. This happened most recently on December 7 when prices reached $2.5235/lb, the highest market level since September 2011. Through the following weeks the market retreated back to $2.20/lb, remaining higher than the previous resistance mark of $2.15/lb we saw in July and October of 2021.
In recent days the market has traded around $2.35/lb, in between the current support of $2.20/lb and latest resistance line of $2.50/lb.
Global Coffee Industry Statistics
- The ICO composite price indicator continues to climb, breaking through the $2.00/lb mark. Brazilian naturals have seen the largest increase, reaching $2.30/lb. This price nearly doubles the $1.16/lb level of January 2021.
- Combined certified stocks in the US and Europe have fallen for seven consecutive months, totaling 3.33 million bags. This is a 31.5% decrease from June 2021.
- Brazilian exports totaled 6.36 million bags over the last two months, down 31.4% compared to the same period last year.
- 2020/2021 coffee year production has been revised up to 169.66 millions bags and consumption up to 167.25 million. This represents a net reduction in the oversupply of coffee to 2.41 million bags.
Read the ICO’s full December 2021 report here.
Source: ICO Coffee Market Report, December 2022
At Origin
Honduras Harvest Report
Harvest is underway in nearly all regions across Honduras, and our partners are busy picking, processing, and receiving coffees. As of January 6, Honduras has registered 1.2 million bags sold from the current crop, with 500,000 bags exported already at an average price of $2.12/lb FOB (according to IHCAFE). The total amount of coffee sold and exported by this part of the season is around 40% higher than totals last year, which is in line with the early crop timeline seen across Central America this year.
Honduras held elections in November, electing Xiomara Castro who will be the country's first ever woman to serve in the role. Nearly 69% of eligible voters participated in the election, and the president-elect earned 51% of the vote to win by nearly 500,000 votes (source). Speaking with our partners throughout Honduras, the general message is one of hope.
Washed coffee being dried in Marcala, Honduras
The president-elect faces an interesting and challenging time for coffee growing communities throughout Honduras as coffee prices are hitting record highs, but so are the costs of production. The global logistics crisis has led to agricultural input prices to increase, doubling or tripling in some instances according to our suppliers in Honduras. In combination with the economic downtown during the ongoing COVID-19 pandemic, the number of Central Americans who are considering emigration to the US is increasing (source). It is now up to policy makers to make Honduras an attractive country to work in. This effort is intrinsically tied to the coffee industry, as it is one of the largest industries in the country. This has already resulted in some higher wages for people working in the coffee fields, which will then be passed to the cost of the coffee. With the C Market trading high, this cost is currently being covered. However, the question remains: what will happen if the C Market price comes back down, and the cost of production does not?
Our partners from the COMICOVEL cooperative in Intibucá say the following:
The higher prices from this year allow us to invest in the cooperative infrastructure and will allow the associated producers to renovate their farms. We focus on renovation as a way to prepare for the future: a changing climate as well as the possibility of cost staying high even when the market drops.
-Erlinda Martinez, COMICOVEL
Ally Coffee in Honduras
We're excited to continue to work in Honduras four the fourth consecutive year, and proud to continue building relationships with our partners across the Copan, Marcala, Opalaca, and Santa Barbara regions of the country. As the country continues to move away from being known for volume lots with little transparency, we look forward to continuing to be able to source traceable coffee from across Honduras as we aim to expand our volume purchased from our partners there.
This year and next we will work to balance the high level of the C Market with a desire to grow with our partners. Impact at the farm level isn't made only by the price paid per pound, but also by the number of bags purchased overall; this has been the key to Honduras' growth and export strategy. The greatest challenge to this strategy will continue to be cost of production. Increased labor, fertilizer, and other fixed costs doesn't guarantee greater volumes or quality, especially as producers aim to sell to specialty coffee markets. This obstacle is why we're proud to continue finding ways to connect our partner producers and their coffees to the right people around the world.