Financial Crisis, Climate Change, Weather Impacting Coffee
Because all coffee is grown between the Tropics of Cancer and Capricorn, it's easy for Americans to lose sight of the agricultural nature of coffee beans. The only state and territory we have in coffee growing country are Hawaii and Puerto Rico respectfully. So we'll continue to post information about coffee crops around the world to increase knowledge and appreciation for our java juice of choice.
It appears that Guatemala is the latest country to report lower yield levels due to a heavy rainy season, increased operational costs, and climate change.
"Bi-cyclical factors have taken a toll on the crop, especially in the area of Atitlan (Sololá), Antigua (Sacatepequez) and Santa Rosa," it said. In addition, climate change has led to a flowering out of season. Chilly winds during the first quarter of 2008 also burned some coffee trees, hence hindering the coming crop.
The main affected areas are Santa Rosa, Antigua (Sacatepequez), Atitlan (Sololá) and Huehuetenango. A prolonged and extremely heavy rainy season has affected the trees in terms of fungal diseases, it added. Guatemala is the largest coffee producer and exporter in Central America; coffee is the main agricultural export, and key to employment in rural areas.
Edited by Marvin G. Perez CoffeeNetwork.com
Mobjack Bay Coffee Roasters currently offers coffee from Huehuetenango, and we hope to continue to do so. An interesting note is that operational costs for farmers have increased with rising prices of fertilizer and insecticides, both items organic farmers don't have to deal with. It is unclear how the fungal diseases will impact organic farms, but as more information is released we'll pass it along.
From an economic standpoint, the financial crisis is also impacting coffee exporters/importers. The most important point to take from the Reuters report below is that the financial crisis is causing bottle necks that jam normal operating procedures. From delayed shipments to fluctuating commodity pricing, US importers are struggling to get their arms around issues they can't control. March futures are currently up, but there is no real way to confidently predict pricing. Furthermore, Organic prices have remained relatively stable. It's uncertain if this is an anomaly or a function of fair trade practices, but one thing is for certain, nothing can continue to remain immune to the current financial global crisis.
SINGAPORE/JAKARTA, Nov 17 (Reuters) - An Indonesian coffee exporter is believed to have defaulted on the shipment of around 30,000 tonnes of beans, while another 40,000 tonnes may not be shipped due to falling prices and liquidity problems, industry sources said on Monday.
Talk of defaults by Indonesian exporters resurfaced in Europe late last week, and some dealers said they had refrained from doing business with the world's second-largest robusta producer after Vietnam due to uncertainties in shipments.
A lawyer representing PT Tripanca Group, a major exporter in Indonesia's growing province of Lampung on the island of Sumatra, said two banks had seized beans kept in the company's warehouses due to a problem with loan repayment.
"Some beans belong to suppliers but they have not been paid yet. Some suppliers have also kept their beans at Tripanca's warehouses, waiting for the price to recover," said Albert Tiensa.
"Tripanca owes about 304 billion rupiah ($26 million) to suppliers. It used the beans as a collateral to pay for the loan," told Reuters by telephone.
London coffee prices tumbled to a 17-month low of $1,581 a tonne in late October as fears of global recession spurred selling in soft commodities complex, including coffee, sugar and cocoa.
"We can say there are about 70,000 tonnes of beans at Tripanca's warehouses, and at least 30,000 tonnes have been defaulted," said a senior industry official.
In Indonesia, coffee exporters normally agree on export commitments but delay decisions on prices until after beans have been delivered. Sumatran bean prices track London robusta futures.
Dealers in Lampung said the defaults only affected PT Tripanca and other exporters were struggling to fulfil their contracts despite a drop in coffee prices.
"There's a real default of 30,000 tonnes of beans by Tripanca. The company is suffering from big losses because of sharp drop in coffee prices," said a regional dealer. "There are delays from other exporters but I think the amount is not that much," he said.
Many exporters bought beans from farmers when local prices hovered around 18,000 rupiah a kg ($1.54) in August. The price has since dropped more than 20 percent to 14,000 rupiah, meaning exporters would suffer losses if they shipped out the beans now.
The provinces of Lampung, South Sumatra and Bengkulu account for 75 percent of Indonesia's coffee output. Coffee bean exports from Sumatra nearly doubled in the first 10 months of 2008 supported by bumper harvests, but overseas sales are likely to slow until the end of the year as the main harvest has ended, data showed on Monday. [COF/ID]
The main robusta harvest in Sumatra normally starts from March and peaks in August. Robusta accounts for 85 percent of Indonesia's coffee bean output, while aromatic, higher-value arabica makes up the rest. ($1=11,700 rupiah)
It appears that Guatemala is the latest country to report lower yield levels due to a heavy rainy season, increased operational costs, and climate change.
"Bi-cyclical factors have taken a toll on the crop, especially in the area of Atitlan (Sololá), Antigua (Sacatepequez) and Santa Rosa," it said. In addition, climate change has led to a flowering out of season. Chilly winds during the first quarter of 2008 also burned some coffee trees, hence hindering the coming crop.
The main affected areas are Santa Rosa, Antigua (Sacatepequez), Atitlan (Sololá) and Huehuetenango. A prolonged and extremely heavy rainy season has affected the trees in terms of fungal diseases, it added. Guatemala is the largest coffee producer and exporter in Central America; coffee is the main agricultural export, and key to employment in rural areas.
Edited by Marvin G. Perez CoffeeNetwork.com
Mobjack Bay Coffee Roasters currently offers coffee from Huehuetenango, and we hope to continue to do so. An interesting note is that operational costs for farmers have increased with rising prices of fertilizer and insecticides, both items organic farmers don't have to deal with. It is unclear how the fungal diseases will impact organic farms, but as more information is released we'll pass it along.
From an economic standpoint, the financial crisis is also impacting coffee exporters/importers. The most important point to take from the Reuters report below is that the financial crisis is causing bottle necks that jam normal operating procedures. From delayed shipments to fluctuating commodity pricing, US importers are struggling to get their arms around issues they can't control. March futures are currently up, but there is no real way to confidently predict pricing. Furthermore, Organic prices have remained relatively stable. It's uncertain if this is an anomaly or a function of fair trade practices, but one thing is for certain, nothing can continue to remain immune to the current financial global crisis.
SINGAPORE/JAKARTA, Nov 17 (Reuters) - An Indonesian coffee exporter is believed to have defaulted on the shipment of around 30,000 tonnes of beans, while another 40,000 tonnes may not be shipped due to falling prices and liquidity problems, industry sources said on Monday.
Talk of defaults by Indonesian exporters resurfaced in Europe late last week, and some dealers said they had refrained from doing business with the world's second-largest robusta producer after Vietnam due to uncertainties in shipments.
A lawyer representing PT Tripanca Group, a major exporter in Indonesia's growing province of Lampung on the island of Sumatra, said two banks had seized beans kept in the company's warehouses due to a problem with loan repayment.
"Some beans belong to suppliers but they have not been paid yet. Some suppliers have also kept their beans at Tripanca's warehouses, waiting for the price to recover," said Albert Tiensa.
"Tripanca owes about 304 billion rupiah ($26 million) to suppliers. It used the beans as a collateral to pay for the loan," told Reuters by telephone.
London coffee prices tumbled to a 17-month low of $1,581 a tonne in late October as fears of global recession spurred selling in soft commodities complex, including coffee, sugar and cocoa.
"We can say there are about 70,000 tonnes of beans at Tripanca's warehouses, and at least 30,000 tonnes have been defaulted," said a senior industry official.
In Indonesia, coffee exporters normally agree on export commitments but delay decisions on prices until after beans have been delivered. Sumatran bean prices track London robusta futures.
Dealers in Lampung said the defaults only affected PT Tripanca and other exporters were struggling to fulfil their contracts despite a drop in coffee prices.
"There's a real default of 30,000 tonnes of beans by Tripanca. The company is suffering from big losses because of sharp drop in coffee prices," said a regional dealer. "There are delays from other exporters but I think the amount is not that much," he said.
Many exporters bought beans from farmers when local prices hovered around 18,000 rupiah a kg ($1.54) in August. The price has since dropped more than 20 percent to 14,000 rupiah, meaning exporters would suffer losses if they shipped out the beans now.
The provinces of Lampung, South Sumatra and Bengkulu account for 75 percent of Indonesia's coffee output. Coffee bean exports from Sumatra nearly doubled in the first 10 months of 2008 supported by bumper harvests, but overseas sales are likely to slow until the end of the year as the main harvest has ended, data showed on Monday. [COF/ID]
The main robusta harvest in Sumatra normally starts from March and peaks in August. Robusta accounts for 85 percent of Indonesia's coffee bean output, while aromatic, higher-value arabica makes up the rest. ($1=11,700 rupiah)
Labels: Climate Change, Coffee, Export, Financial Crisis, Import
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