The World Market
C-Market Analysis
Source: Tradingview
Since our last report, the C Market price has fallen to reach $1.52/lb at the time of writing (August 16) after climbing as high as $1.68 on August 3. Volatility remained relatively low for the most part, though the period did see single days of both price increase and decrease of more than five cents. The current price of $1.52 is the lowest the market has seen since mid-January of this year, with only five trading days in 2023 closing below today’s level. Compared to this time last year the market is currently down more than 31%, and is down 25% from the year’s high of $2.03/lb.
Global Coffee Industry Statistics
Sourced from the International Coffee Organization unless otherwise noted. Read their full July 2023 Coffee Market Report here.
- The ICO Composite Indicator Price lost 7.2% from June to July 2023, averaging 171.25 US cents/lb for the latter, whilst posting a median value of 158.4 US cents/lb.
- Average prices for all group indicators fell in July 2023, with Colombian Milds suffering the heaviest loss, decreasing by 10.0% and averaging 190.58 US cents/lb. Robustas were subject to the lightest downturn, falling 3.4%, and averaging 127.58 US cents/lb in July 2023.
- Intra-day volatility of the I-CIP followed a consistent downtrend, reaching 7.8%, a 0.3 percentage point decrease between June and July 2023.
- New York and London certified stocks decreased 2.9% and 29.4% respectively, closing in at 0.58 million 60 kg bags, whilst certified stocks of Robusta coffee reached 0.89 million 60 kg bags.
- Global green bean exports in June 2023 totalled 9.39 million bags, as compared with 10.06 million bags in the same month of the previous year, down 6.7%.
- World coffee production decreased by 1.4% year-on-year to 168.5 million bags in coffee year 2021/22; however, it is expected to bounce back by 1.7% to 171.3 million bags in 2022/23. World coffee consumption increased by 4.2% to 175.6 million bags in coffee year 2021/22. It is expected to increase by 1.7% to 178.5 million bags in coffee year 2022/23.
- As a result, the world coffee market is expected to undergo another year of deficit, with an estimated shortfall of 7.3 million bags in coffee year 2022/23.
At Origin
Harvest in Numbers and Statistics
2023 has been a year filled with challenges for Peru’s coffee producers with financial, environmental, and climate-related struggles applying pressure to this year’s harvest. In speaking with Erly Camizan, Sales Manager of one of our partners in Peru, ElevaFinca, he pointed to a few specific issues as the main challenges for the year:
- Lack of capital for the harvest
- Reduced demand for Peruvian coffee
- A Yellow Coffee Rust outbreak in the country (la roya amarilla)
- Excess precipitation
- A labor shortage for the harvest
All of these difficulties, coupled with a smaller harvest than was originally projected, are setting the nation’s coffee industry up for what could be a difficult year ahead.
Coffee producer Florentino Pintado. Photo courtesy of ElevaFinca.
Peru’s 2022/23 crop was originally projected to yield 4.25 million bags of 60 kg, but these projections were adjusted as soon as the harvest started as many regions were affected by heavy rains, a lack of fertilization, and the blight of coffee leaf rust. These factors have driven current projections down to approximately 3.5 million bags, approximately 18% lower than originally projected and a 6% decrease compared to the 3.725 million bags produced in the 2021/22 season according to the JNC (Junta Nacional del Café).
Beyond the declining production volume projections, exports are also down in 2023 with 16.1 tons of coffee exported in the first quarter of 2023, down substantially from the 60 tons exported in the first quarter of 2022 according to SUNAT (Superintendencia Nacional de Aduanas y de Administración Tributaria). The value of coffee exports has fallen in-kind, from $275 million USD to $76 million USD over the same period, impacted by the lower volumes, reduced prices on the C Market, and a flucuating differential and exchange rate. Speculation suggests that the decrease in exports can be contributed to multiple factors, including increased availability of coffee from Colombia and Central America, as well as the negative impact of the climate on Peru’s coffee.
Exploring some of this season’s challenge
Like many origins have seen, Peru’s coffee industry is experiencing lower sale prices this coffee year. Erly Camizan tells us, “Peru was among the countries that adapted more gradually to the downward shift in internal coffee prices. Prices held at an average of $4.30 USD per kilogram from January through late April. Starting in May, a downward trajectory was observed across the country, reaching as low as $2.50 USD per kilogram. Presently, in the Northern region of Peru, prices have stabilized, maintaining a consistent rate of $2.70 USD per kilogram of parchment coffee.”
Yellow coffee cherries in Peru. Photo courtesy of ElevaFinca.
As a result of the current prices net income for coffee producers has fallen, impacting their ability to reinvest in their farms, as explained by Ivan Cruz, Commercial Manager of Cooperativa Aromas del Valle. “With lower prices the producers have limited access to inputs required for production, as the income is not enough to buy fertilizers. Or, in some cases, they are shortening the amount applied. Also, coffee producers are not renovating the plantations. As a consequence, it is quite hard to recover the productivity affected by the weather in the last years.”
While both prices and production volumes are falling, yellow coffee leaf rust (la roya amarilla) has struck a wide section of the country’s coffeelands. According to the JNC, “The yellow leaf rust disease has affected 26% of the total coffee area in production, estimated at 380,000 hectares, bringing on losses of $89 million USD for small coffee producers across the country… it represents a reduction in production close to 0.5 million bags of 60 kg.” In the chart below you can see the percentage of each region’s coffee growing area currently affected by la roya amarilla.
Ally Coffee in Peru
Peru is an important origin, and one that has been growing and evolving in both volume and quality. This year, we have high expectations for the harvest, and are working collaboratively with several organizations through our partner ElevaFinca who has extensive knowledge of the coffee landscape in Peru. Erly Camizan explained some of the organization does, telling us, “ElevaFinca represents commodities produced from an alliance of cooperatives participating in agroforestry projects launched and financed by Urapi Sustainable Land Use Fund, a private equity fund. ElevaFinca acts as a facilitator at origin for buyers, providing tailored solutions to meet their product inventory and environmental and social impact objectives. ElevaFinca is positioned in direct contact with the alliance of cooperatives to provide buyers a wide range of offerings and reliable procurement services.”
We’re proud to be partnered with organizations like ElevaFinca, who have built strong ties with producers through the development of high impact social, economic, and environmental projects. Be sure to reach out to your account manager to discuss your Peruvian coffee needs, or to learn more about what might be coming to your region!