Colombian coffee prices, supported by production worries stoked by persistent rains, dodged the worst of an easing in overall values, and lifted their premium to Brazilian beans to the lowest since at least 2011.
Coffee prices, as measured by an International Coffee Organisation index, fell by 2.3% in May to 193.71 cents a pound, a seven-month low, the intergovernmental group said.
The decline, only the second monthly drop since October 2020, was led by Brazilian natural arabica beans, which are grown in Ethiopia and Paraguay as well as Brazil.
“The Brazilian naturals performed the least well of all growths by declining 3.7% to 217.84 cents per pound from April to May,” the ICO said.
‘Far beyond the average’
Prices of Colombian mild arabica beans fell by a more modest 2.1% to 286.44 cents a pound, allowing their premium over Brazilian naturals to expand to 68.60 cents a pound, the largest on a dataset going back 12 years.
The increase came amid waning expectations for Colombia’s arabica production, which growers’ federation Fedecafe said would thanks to poor weather dip in 2022 to 12m-12.5m bags, from a 2021 total of 12.6m bags, which was also depressed by heavy rains blamed on La Nina.
Roberto Velez, the Fedecafe head, noting that “we are close to more than two years of the La Nina phenomenon. We have rains that are far beyond the historical average,” federation head told journalists, explaining that clouds and rains delay the flowering of coffee trees.
Output from Colombia, the second-ranked arabica producer after Brazil, peaked in 2019 at 14.8m bags.
‘Persistent unfavourable weather’
Colombia’s production setback has been reflected in shrinking exports, which the ICO estimated at 900,000 bags in April, a drop of 13.2% year on year, extending a period of underperformance so far in 2021-22, as started in October.
“The fall in the exports is linked to persistent unfavourable weather conditions reducing the available supply of coffee in the country,” the ICO said.
The US Department of Agriculture’s Bogota bureau last week cut its forecast for Colombia’s coffee exports in 2021-22 (as started in October) to 13.1m bags, nearly 1.0m bags below the official USDA estimate, citing the “unexpected reduction in production”, as well as “increasing domestic consumption”.
“Excessive rains and cloudiness from the La Niña weather phenomena during the first five months of 2022 affected coffee production,” the bureau said, noting too forecasts from official meteorologists that rainfall will up to July come in 20-40% above average levels in some coffee-growing areas.
Exports for 2022-23 were forecast easing further, to 13.0m bags, “primarily a result of stagnant production” which was expected to remain at 13.0m bags.
The ICO also highlighted too the slow rate of recovery in exports from Honduras, a key producer of “other mild” arabica beans, and the largest shipper in Central America.
Noting 1.1% growth to 2.94m bags in exports for 2021-22 up to April, the organisation said that “the lacklustre performance, so far, of Honduras is related to less rainfall during the beans growing period in a number of growing regions”.
Furthermore, the country’s plantations had suffered a “high incidence of rust disease as a result of hurricanes Eta and Iota”.