This month we take a look at coffee year 2021/22, which ran from October 1, 2021 through September 30, 2022. Globally, the year saw high coffee prices and high costs of production for producers, along with showing the first indications of potential relief from the logistics challenges experienced by people worldwide. At Ally, we were glad to return to origin and major industry trade shows this year, as well as to announce two new offices including our expansion into a new operating region. Read on to see a review of the C Market and data from the International Coffee Organization, the latest update on the logistics industry, and news from throughout the Ally team in this year's Coffee Year in Review.
The Global Market
C Market Analysis
Source: Tradingview
Though not entirely unprecedented, the price movement in the C Market throughout this coffee year was significant. The market broke a decade old high price of $2.60, and if we look beyond the price spike seen in 2011 we see this is the second time the market has reached this price since 1997. Speaking in historic terms, the prices reached this year have only been seen six times since 1974.
Uncertainty ruled most of the market year for those throughout the industry. The damaging frost in Brazil posed major questions about supply in the futures market while certified stocks of coffee dwindled throughout much of the year. The invasion of Ukraine also contributed to rising production costs for coffee producers and farmers everywhere as sanctions were imposed on Russia, a major exporter of seaborne ammonia which is an important component in fertilizers. This, among other factors, contributed to coffee prices rising dramatically along with the cost of production for producers. In recent days the market has slid significantly due to uncertain demand and a potential 10% increase in production in Brazil in 2023. At the time of writing (November 15), the market sits at $1.58 / lb, a nearly 20% dip from one month ago and more than a full dollar lower than the high price reached in February.
Global Coffee Industry Statistics
All information sourced from the ICO Monthly Market Report unless otherwise noted. Read the full October 2022 report here.
- The ICO Composite Indicator Price (I-CIP) lost 10.6% from September to October 2022, averaging 178.54 US cents/lb for the latter, whilst posting a median value of 177.22 US cents/lb. In October 2022, the I-CIP fluctuated in between 159.30 and 194.92 US cents/lb.
- Global exports of green beans were down 1.1% in coffee year 2021/22, totalling 116.07 million bags compared to 117.32 million bags in coffee year 2020/21. The performances of the four main regions were varied.
- South America saw the largest decrease of 7.1% to 55.31 million, with an 11.4% decrease in Brazil alone.
- Central America and Mexico saw a small decrease of 3.3% to 16.09 million bags, mostly due to a sharp downturn in Honduras of 20% and about 10% in Guatemala, likely related to the events of the Hurricanes in November 2020.
- In Africa, a decrease of 5.1% was recorded with Uganda and Burundi being the main countries posting a decrease. Ethiopia saw a slight increase to four million bags.
- Asia & Oceania are the only producing regions showing an increase in exports this year with 14.8% gained, bringing their exports to 43.86 million bags. Vietnam led with a 14.9% increase to 28.19 million bags, of which the majority was Robusta. India also saw a substantial increase of 21.7% to 7.24 million bags.
- The New York certified Arabica stocks decreased 9.3% from the previous month, closing in at 0.41 million bags. Certified stocks of Robusta coffee reached 1.52 million bags, representing a decrease of 4.3%.
- The estimated 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 in the previous coffee year. World coffee consumption was 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 was expected to exceed production by 3.1 million bags.
Coffee Year 2021/22 in Review
The Coffee Year in Logistics
In last year’s 2020/21 Coffee Year in Review, we reported on the significant logistics struggles faced by nearly every industry in the wake of COVID-19 pandemic. At the time of the report, 93% of all cargo was arriving at its port outside of its typical schedule, and major ports in cities like Los Angeles were experiencing unload times nearly 17000% longer than historical averages. Shipment disruptions and costs 4–10x higher than usual took an especially heavy toll on the coffee industry as shipping companies prioritized higher-value goods like consumer electronics, frequently rolling containers of coffee to wait to see if they could make it on to the next ship. As experts estimated that the situation would see little relief before the end of the 2022 calendar year, we’d like to look at how the situation has changed since last year’s report, and provide up-to-date information on the current situation in logistics.
Statistical Updates to Logistics This Year
Since late 2021, ocean freight schedule reliability has shown relatively consistent improvement according to C.H. Robinson. This trend was reversed in September 2022, though the On Time% only receded by 0.7%, settling at 45.5%. We also see in the charts below that not only has On Time% increased since our last report, but that the average delay of late vessels has decreased since the beginning of the year, falling by approximately two days. While these numbers don’t suggest a return to business as usual, the slow recovery has brought at least some level of relief.
Global Schedule Reliability
Average Delay of Late Vessels
Particularly notable is the ongoing congestion at US ports, as both coasts have alternated showing extraordinary dwell times throughout the last 12 months. Most recently, both Oakland and Houston are experiencing the longest average berth times as ships wait an average of approximately 2–3 weeks. Some of these ocean freight delays could be attributed to the slowing of rail freight as well, interrupting the necessary finely-tuned flow of containers into and out of ports to keep freight moving. The ongoing train chassis shortage has left some ports without an outlet for their containers, leaving the ports’ typical storage space full and requiring newly arrived shipping containers to be built into stacks. However, once a port is congested to that level, rail lines tend to avoid the congested hubs and the associated delays they’ll experience there. While there’s little to be gleaned directly from the situation, it does indicate that we’ve yet to return to the typical flow of goods that many people had become accustomed to in recent decades.
Shipment Prices Begin to Decline
Though container lines are still highly profitable in 2022, freight rates have finally begun to decline amid slacking demand. This downward trajectory could indicate the market finally reached its peak sometime over the last twelve months. As demand and prices begin to decline, some carriers are opting to forgo some planned sailings and even temporarily suspend some services on major tradelanes. Despite this recent shift, it’s difficult to project what this could mean for the coming months.
Bags of coffee ready to be unloaded at CTI-SC
Ongoing Impact for Ally Coffee and Your Roastery
Looking at the latest situation at ports around the world, it’s plain to see that there’s still a significant amount of recovery left for the logistics sector before a return to normal. For Ally, some of our major destinations such as New York, Oakland, and more recently Houston, are still seeing long dwell and offload times with little sign that relief is imminent. As the months continue this has also brought about a shifting of the typical balance of imports at various ports, with the Port of New York and New Jersey displacing the Port of Los Angeles and the Port of Long Beach as America’s top container port by volume in August. While this doesn’t indicate anything concrete for the future, it does suggest that that situation is still in flux.
Throughout the last year, our international team has worked to mitigate as much impact as possible for our partners around the world. This has meant working flexibly, paying high prices in the spot shipment market when necessary and looking ahead to find alternative ports when available in order to do our best to ensure on time delivery. The lack of containers available at origin and the unavoidable reality of having bookings rolled has presented challenges to everyone throughout the coffee industry, but with freight demand beginning to wane there are signs that the situation could begin trending in a positive direction. Unfortunately, we can’t predict what the coming months will bring, but we are committed to continuing to work diligently to keep coffee moving around the globe.
Updates from our Sourcing Offices
When we meet with our producing and exporting partners after each harvest we always say how this harvest was like no other, and that continues to hold up as this coffee year was no different in that sense. Out-of-control weather over the last two years in Latin America—heavily influenced by the ongoing La Niña weather event as well as the 2021 frost in Brazil—saw the overall production in the region decline substantially. Consequently, local markets saw buying frenzies by major players to cover their needs for forward contracts. Hence, the premiums paid for specialty coffee rose alongside the decade-high prices for commodity coffees. All in all this created a challenging time for our sourcing offices. Our long-standing relationships helped us to weather these unstable times and we were able to fulfill our obligations to our clients while ensuring that we continue operating according to the expectations of our suppliers.
Central America Green Coffee Buyer Abraham Castro (L) with Senel Campos (R) at Don Senel Micromill in the Brunca region of Costa Rica
To manage these times, we created a new role of Specialty Coffee Sourcing Manager now filled by Bram De Hoog, previously our Central America Green Coffee Buyer, to oversee the sourcing and quality control departments. We also relocated our sourcing office in Costa Rica to the heart of the Tarrazú coffee region, with Abraham Castro taking the lead there to manage purchasing in Central America.
In Colombia, we are looking forward to bringing on a new buyer responsible for this diverse origin which was particularly affected by the aforementioned climate and market issues. This will bring our bustling Bogotá office to a total of four, further establishing it as the hub for Ally in the country.
In Ethiopia we were able to achieve unprecedented growth despite the increased prices for coffees as we expanded outside of the Southern coffee regions for the first time and added the growing area of Limmu to our lineup.
Ethiopia Green Coffee Buyer Rahel Mulat (front) inspecting Natural coffee being dried at the Gedeb Haloberiti washing station in the Yirgacheffe growing area of Ethiopia
Finally, in Brazil we witnessed the expansion of Grupo Montesanto Tavares Farms—Ally’s sister company in Grupo Montesanto Tavares—which now proudly includes Fazenda Mimoso alongside our longstanding offerings from Fazenda Primavera. Together these farms lead by example in Brazil, and we’re proud to be able to share their work with the world through our vertically integrated supply network. Additionally, we purchased a Carbon Neutral coffee from Brazil for the very first time as well, which is slated to ship to Vollers UK this year.
Looking forward to 2023, it’s hard to say what we can expect. Our international team has learned to work under the most challenging market conditions in our company’s history this year. The last number of months have shaped us and brought a deeper understanding of the dynamic between local and international market forces, as well as of the expectations between origin and destination. It is our pride that since the outbreak of COVID 19 we have been able to fulfill all of our purchase commitments and stand by our many producer partners in uncertain times. It is during these times the belief in our role in the industry is strengthened. The affirmation of the value of stability we have brought along the supply chain inspires us to continue to do what we do best: moving coffee forward.
Ally Coffee’s Year in Review
Coffee Year 2021/22 brought with it a number of exciting developments for us at Ally Coffee. Not only did we return to origin on our Ally Coffee Champ Trip for the first time since 2019, but we were also thrilled to exhibit at and attend a number of trade shows across the globe to reconnect with the people who make the industry happen each day. The last twelve months were also highlighted by the release of our latest online learning course The Comprehensive Coffee Sample Roasting Course, the publication of a broad collection of producer features and educational articles on our Get Inspired blog, the announcement of the Grupo Montesanto Tavares Sustainability Policy and 2020 Sustainability report, and perhaps most notably the growth of our European operations to include a new office in Hamburg, Germany, and the announcement of our expansion into the Oceania & Asia markets with a new office in Melbourne well underway.
Top left, left to right: Sandy Infante, Jeff Courson, and Benjamin Karski at SCA Expo 2022. Bottom left, left to right: Edward Anderson Brown, Albin Frid, and Filip Odeholm at World of Coffee 2022. Right: Ricardo Pereira speaking at the World Barista Championship at MICE 2022, photo credit: SCA.
Returning to Events and Trade Shows
Returning to some of the industry’s biggest events like the Specialty Coffee Expo and World of Coffee has been highly anticipated by our team since we last exhibited in 2019. We were also proud to exhibit at the Melbourne International Coffee Expo for the first time this year as we plant new roots for Ally in Australia. These events provide unmatched opportunities to connect with people from throughout the industry all in one place, and to share the latest from Ally Coffee with them directly. We were glad to see our booths become a space for tasting coffee, engaging in conversations, seeing longtime partners and friends, and meeting fresh faces in Boston, Milan, and Melbourne, and we look forward to returning to these shows in 2023.
Returning to Origin with the Ally Coffee Champ Trip
This year also brought us the opportunity to return to origin as our Ally Coffee Champ Trip visited Brazil, during which we excitedly traveled with a group of World Champion coffee competitors and esteemed coffee professionals on a tour of the Brazilian coffeelands to meet some of our producing and exporting partners including the teams at Fazenda Minamihara, Fazenda Bela Época, Cafebras, Fazenda Dois Irmãos, and Fazenda Primavera. When reflecting on this year’s trip, Barista Magazine Founder Sarah Allen told us, “I have learned so much from Ally about Brazilian coffee, which is often maligned in specialty circles. On this trip, Ally showed us so many facets of coffee production in Brazil, from small and medium size farms to massive ones, discussion about exporting and processing, and even a trip to a vineyard—it's always fascinating to see other agriculture when visiting coffee-producing countries.” You can see our full recap in words and pictures in our blog, Ally Champ Trip 2022 - Champions in Brazil, as well as seeing a collection of media published by some of our guests in the blog Ally Coffee Champ Trip 2022 - Media from our Guests!
The Ally Coffee Champ Trip 2022 group with the Cunha family, team from Fazenda Bela Época, and other coffee professionals from Brazil.
Growth at Ally Coffee - New Offices in Hamburg, Germany and Melbourne, Australia
We’re very proud of our growth throughout this coffee year as we opened a new office in Hamburg, Germany and have expanded our operation to include the Oceania & Asia markets. Our Hamburg office adds to our European offices located in Lausanne, Switzerland and Gothenburg, Sweden, and includes purchasing, sales, and a quality control lab with a focus on commercial trading. Sebastian Link, Ally Coffee Commercial Trading Manager, heads up the new office. “Hamburg is a coffee hub and home to one of the largest ports in Europe,” he tells us. “Opening this new office demonstrates a growth that will give Ally Coffee a broad and diverse footprint, opening new doors to the European coffee industry as well as offering new origins and coffee qualities to the existing customer base.”
Our upcoming Melbourne office will be our homebase in the region as we begin warehousing green coffee for spot purchases in Australia, New Zealand, and Singapore. “We always wanted to reach the Oceania market and had plans to go there in 2020, but because of Covid we had to put the idea on hold. We always saw this market as a place we wanted to go to and are looking forward to the opportunity this represents,” says Ricardo Pereira, Ally Coffee COO. The office and sales team in the region will be led by Tercio Borba, Ally Coffee Sales Manager for Oceania & Asia, who brings more than a decade of experience developing roaster relationships in the region to our team. “Working in the coffee industry for 15 years, I had the opportunity to meet Ricardo and some of Ally’s team members around the world and have a profound respect for the company's values and vision. Now becoming a part of this exciting business brings a great sense of responsibility and drive to develop the industry even further,” says Tercio.
Future Outlook for Ally Coffee
Coffee year 2021/22 was filled with challenges, successes, and some major developments for us at Ally. Looking ahead, we're excited to continue our growth as our first containers to Asia & Oceania set sail and our new team in the region establishes themselves as part of our global sales network and logistics operations. As we do each year, we also look forward to continuing to expand and refine our green coffee sourcing as our green coffee buyers in Brazil, Central America, Colombia, and Ethiopia seek out coffees to fulfill the needs of coffee roasters across four continents.
Be sure to contact your Account Manager or connect with us through our Contact Us page to start the conversation about your needs and how Ally can help open up the opportunities that move coffee forward for you this year.