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Central American coffee leaf rust sends roasters to new markets for beans

7/11/2013

1 Comment

 
     
  1. Central America grows 20 percent of
    world's  arabica coffee
    Costa Rican coffee farmers waiting for
      prices to rise
    Some high-quality roasters look to
    Vietnam,  China as alternatives

  By Marcy Nicholson

 NEW YORK, July 10 (Reuters) - The Central American coffee
  market has been nearly paralyzed by fears of its worst-ever outbreak of leaf
  rust, as well as a collapse in futures prices, which have combined to create a
  standoff between big roasters and small farmers.

 As a result, some buyers are looking to Brazil, East
Africa,  China and Vietnam for beans from the 2013/2014 crop, while Central
American  farmers are reluctant to sell, hoping for a bounce in prices that have
slumped  to a four-year low.

 "People are not buying, fearful that the coffee won't be
  delivered, and the producers are not selling due to low prices," said Eric
  Thormahlen, president of the National Chamber of Coffee Exporters in Costa
Rica,  a producer of arabica beans.

 "Producers are waiting for a price miracle and they are
also  waiting to see how big the harvest for next year will be to start
  selling."

 Some coffee buyers are reluctant to risk broken deals if
the  disease, known as "roya," cuts deep into the upcoming crop from Central
  America.

 While it is clear that Central America's high-quality
  arabica crop will likely suffer, the extent of the damage will not become
  apparent until August or September. That is when coffee cherries will appear,
  enabling more accurate production estimates, and is also when the bulk of the
  roasters are expected to start signing contracts.

 Coffee leaf rust appears as powdery orange spores on the
  underside of infected leaves, eventually turning them black and causing them to
  fall off, either killing or significantly weakening the tree, reducing yields
  and affecting bean quality.

 "No one is really selling the new (Central American) crop
  because we don't know what the impact of the roya fungus is going to be," said
  Ray Keane, president of mid-sized green coffee importer Balzac Bros., in South
  Carolina.

 "Producers don't want to sell it, exporters don't want to   sell it, importers don't want to risk it. But there is pretty good Brazil   business being done."

 It remains to be seen whether the increased interest in   Brazilian coffee due to the uncertainty over Central America's upcoming crop   will further boost the value of beans from the world's top grower.

 Central America produces around one-fifth of the world's   arabica coffee, and much of its high-quality beans with unique taste profiles  is  grown at high altitudes.


The current 2012/13 (October/September) Central American   crop was reduced by around 15 percent, to 17.3 million 60-kg bags due to roya,   with 2013/14 production expected to be hit even harder by the fungus, the   International Coffee Organization said in its June report.

 In May, the ICO reported the leaf rust outbreak in Central   America was the worst since it first appeared in the region in 1976. Coffee   crops in Mexico and Peru were also hit by the disease in the 2012/2013 crop   year.


The benchmark arabica coffee
KCc2
price on  ICE Futures U.S. dropped about 60 percent to a four-year low below
$1.20 per lb  at the end of June, from a 34-year high more than two years ago as
Brazil  harvests another huge crop.


"I don't think anyone in Central America's panicked for   selling coffee today because the general view is there won't be enough," said   one U.S. importer.

 Premiums for the Brazil's finer beans
COFSAN-23-NYC on the physical market are
currently at 1.5 cents per  lb over ICE Futures U.S. benchmark prices after  trebling in value in the six  weeks to the end of June.

 In Nicaragua, premiums for high-quality arabica
COF-NIC-NYC on the physical
market are at 15-month highs, almost  double end-January levels, as supplies
have fallen toward the end of the  marketing season.
 
LOOKING ELSEWHERE

 The leaf rust situation has caused John Gozbekian, a buyer   for Coffee Reserve Brands in Phoenix, Arizona, to order some beans from Vietnam   for the first time, and he has his eye on China as another option, which would   be another first for him.

 "It's the roya that has spurred my keeping options open  for  other origins," Gozbekian said.

 Others are looking toward East Africa for high-quality   arabicas. The ICO forecasts production in Ethiopia to have jumped by 19 percent   to 8.1 million bags in 2012/13, and in Tanzania by a whopping 90 percent to 1   million bags.

 "I'm looking for back-up origins in case quality is   affected," said Michael Boyd, buyer for Boyd Coffee Company in Portland,  Oregon.  He said East Africa is a good alternative.


But the biggest beneficiary appears to be Brazil, which is   currently harvesting its 2013/14 crop (July/June).

 "Those who are roasting low-grown washed arabica coffees,  to  a degree, are bypassing Mexico and Central America for Brazil," said one  U.S.  veteran coffee dealer.

 While medium- to large-sized roasters often have  flexibility  to buy beans from different countries for their blends, many  high-end roasters  offer distinct taste profiles and single-origin  brews.

 Many high-quality roasters are firming up producer   relationships with extra visits to Central American farms.

 "If I don't go back to meet with the group of farmers I   bought coffee from, someone else will," said Andrew Miller, owner of Café   Imports based in Minneapolis.


Nestle Nespresso
NESN.VX operates farmer  training programs in
Central America that do not obligate the producers to sell  to it but has helped
build relationships with farmers.


Guillaume Le Cunff, Nespresso's international marketing
and  strategy director, expects those efforts to pay off when yields drop and he
  needs to secure high-quality beans later this year.


"I wouldn't say we don't have any concern," Le Cunff said.
  "We do all that we have to do and I think we have the tools to secure
  supplies."


 
1 Comment
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10/13/2013 01:14:50 pm

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  • Home
  • Our Coffees
    • Montreal 'Spot' Offerings
    • New York 'Spot' Offerings
  • Our History
  • About N J Douek
    • Some of our services
    • Meet some of our team
    • Our Cupping Room/Offices
  • Coffee Commentaries
  • Price charts
  • Contact Us
  • Useful Info
  • Accueil
  • Nos cafés
    • Nos cafés à Montréal
    • Nos cafés à New York
  • Notre histoire
  • À propos de N J Douek
    • Certains de nos Services
    • Rencontrez notre equipe
    • Notre labo et bureaux
  • Nous contacter
  • Informations Utiles
  • Chartes de prix