CoffeeNetwork (New York) – The latest USDA attache report pegged Honduras’ coffee production for the 2022-2023 coffee year at 5.94 million bags, up 10% from the 5.4 million bags produced in 2021-2022.
Honduran coffee is grown at high altitudes, with 61 percent of farms located between 3,900 and 5,200 feet above sea level. Coffee is grown in 15 of the 18 Honduran departments (like states) and in 210 (70%) of the 298 municipalities.
Coffee production for MY 2021/22 is forecast to be 5.4 million bags, twenty percent lower than the updated estimate for MY 2021/22 and the lowest since MY 2015/16. A higher incidence of leaf rust and other diseases is expected to reduce coffee production directly by reducing yields and indirectly by rendering more plants unable to produce.
Weather conditions are forecast to remain favorable for leaf rust starting in the month of April with an average coffee rust incidence of 5.42%, and higher incidence in the departments of Intibucá (13.5%), Cortes (10.2%), La Paz (8.3%) Santa Barbara (7.1%), and Yoro (5.7%). Rust incidence is characterized based on thresholds: 5-20% indicate a medium level, and a range between 0-5% indicate a low-level. From the total of coffee farms sampled by the Honduras Coffee Institute (IHCAFE) during the month of April, 66% of them showed a low-level presence of coffee rust, 29% a medium presence and 5% with a high presence of coffee rust. Incidence levels fluctuate based on seasonal climate conditions.
The new coffee production estimate for MY2021/22 is 5.4 million bags, only 20% below the previous forecast of 6.8 million bags. The impact of COVID-19 pandemic and Hurricanes Eta and Iota had a medium significance so far, yet reconstruction efforts of farms and roads access are still under way. Leaf rust incidence spiked in April and harvest was delayed about one month, but not impacted, since the first months of harvest represent about 1% of the total. About six percent of the MY2021/22 coffee still needs to be harvested and 43% is still pending for exports, roasting, and soluble coffee industrialization.
Consumption:
According to the International Coffee Organization the World coffee consumption has been revised upwards, with an estimated increase to 167.68 million bags in 2020/21 as compared to 164.46 million for coffee year 2019/20, an increase of 2.0%. The World production[1]consumption gap for 2020/21 is therefore reduced to 1.20 million bags, now more comparable to pre-pandemic gap of 1.95 million bags.
Domestic Coffee consumption has been following a similar upgrowth pattern as previous years with a 1-4% increase mainly in roasted and soluble coffee consumption.
Per capita apparent consumption places Honduras in the middle apparent consumption group in the region with Panama, Mexico, and Guatemala. According to the International Coffee Organization (ICO) annual consumption is estimated at 2.39 kilograms per capita. The increase in domestic consumption trends comes from the growing presence of coffee bars in shopping malls, gas stations, retail areas, supermarkets, office buildings, and hospitals. A large percentage of the Honduran population is young and is consuming more and different types of coffee drinks. Keurig coffee is a new consumption trend appealing to young consumers and providing a new market pull offer with a variety of flavors and diverse origins. Keurig coffee pods and Keurig coffee machines are being sold at supermarket chains.
Trade:
Exports- FAS Honduras forecasts that the MY 2021/22 exports will be 5.2 million bags, a 20 percent drop from the initial MY 2020/21 estimate of 6.5 million bags. According to IHCAFE Exports to date in the month of April MY 2021/2022 totaled 2.90 million bags of 60 kg, showing a 3.33% decrease compared to the 3.07 million bags registered in the same period of the year 2020-2021. The export volume of 2.90 million 60 kgs bags is 6 percent lower than the previous year, and the harvest progress is at 57.1% as of April, with additional progress expected by September 2022. The average export price is USD$235.22. During MY 2020/21, Honduras exported 3.07 million 60 kg bags to 55 countries at an average price of USD$145.54 per bag, a 62% coffee price increase per bag in MY 2021/2022. The coffee export season is about half-way completed, and more exports are expected through the month of September 2022.
Coffee sales contracts totaled 3.65 million 60 kg bags, showing a decrease of 7% compared to the 3.92 million bags registered on this same date last year. World Exports of Arabica Coffee fell slightly in December 2021 while world exports of Robusta Coffee increased by 25.8% to 4.99 million bags as compared with 3.97 million bags, over the same period last year. The shift indicates some re-balancing of sourcing to offset rising prices and low availability of Arabica from South America.
Exports from South America (from the two largest producers Brazil and Colombia) have decreased 19.2% at 15.28 million bags in the same period. Regional exports from Central America and Mexico have increased to 1.78 million bags in October-December 2021, as compared to 1.38 million bags over the same period in the previous year. The low availability from South America is providing an export opportunity for Honduras and the Central America Region. Shipments from Central America and Mexico have increased 1.78 million bags in October-December 2021, as compared to 1.38 million bags over the same period during coffee year 2020/21. Guatemala, Honduras, Mexico, and Nicaragua are the main countries behind the growth in exports of the region, together accounting for 91.9% of the variation (year-over-year).
Accumulated coffee exports from Honduras in the first quarter of MY 2021/2022 stood at USD$585.8 million, USD$219.7 million above to what was reported in the same period of MY 2020/2021, attributed to the 65.8% year-on-year increase in the average international price, from USD$145.83 in the first quarter of 2021 to USD$241.78 in the month of March 2022 (a price increase of USD$95.94). The improvement in the international price of coffee is linked to pressure in the futures markets, given the expectations of a lower global offer due to interruptions in the supply chain, as well as unfavorable weather conditions particularly in Brazil and Colombia, which have curbed their coffee harvest growth potential with problems in container availability and a smaller harvest of Arabica coffee.
The International Coffee price fell in March 2022, after increasing steadily for 17 months in a row, and the exported volume decreased 3.5% (67,083 60 kg coffee bags). It is not possible to completely evaluate the impact of the Russia-Ukraine conflict on the Coffee Markets and the Coffee Production, and the impact of the conflict will depend on how long the war continues and the severity and duration of the economic sanctions being applied to Russia. Russia supplies nearly 20% of ammonium in the worlds markets which is directly affecting the increased prices of fertilizers, thus increasing the cost of inputs for coffee growers in Honduras and around the world, impacting the global production of coffee and generating the higher international prices of coffee. There is a rising concern if the Russia-Ukraine conflict continues, it might increase the prices of coffee and oil/energy products, slowing down the recovery process of the economy after COVID-19.
Honduras has taken advantage of the Free Trade Agreement signed with the Republic of Korea in 2020, which has become the 9th largest export market in 2021 MY 2020/2021 and 10th in 2021/2022. Honduras remains the 5th largest coffee exporter globally, with 4 percent of the world’s coffee exports.
Informal Exports- According to IHCAFE, the flow of informal exports is around 300,000 bags to the neighboring countries (El Salvador, Nicaragua, and Guatemala). The data is based on observations made at border offices.
Imports -As reported by the Trade Data Monitor, LLC., Honduran imports of Green Bean coffee for domestic consumption in calendar year (CY) 2020 were 577 Green Bean Equivalent (GBE) sacks, a -54% decrease from the CY 2019 previous year, mainly due to higher ending stocks and increased national production of coffee and resulting in imports of 26 sacks in 2021 from United States and Colombia. Honduran imports of roasted coffee for domestic consumption in calendar year (CY) 2021 were 421 GBE 60 kg sacks a 73% increase from the previous year of 243 GBE 60 kg sacks, and originated mainly from the United States, Costa Rica, Colombia, Cuba, Guatemala, and Ecuador.
Juan Valdez Colombian coffee, Starbucks and local artisan roasted coffee are being sold in supermarkets. Coffee shops at malls with local and regional chains like McDonalds are popular. National and International coffee companies like Espresso Americano, Coffee Cup, Nativo and Sigua Coffee sell their roasted and soluble coffee in machines located in malls and office buildings. Additionally, local soluble coffee is now available in smaller containers at supermarkets, since the price of soluble imported coffee is higher than local coffee.
Soluble coffee imports in CY 2021 where 20,996 sacks compared to 23,669 in CY 2020, the year-to-date imports of soluble coffee to March 2022 were 9,589 sacks originating from United States, Mexico, Colombia, Guatemala, Nicaragua, Costa Rica, Canada, Brazil, and Italy.
Stocks:
Stocks are held by 70 exporters and roasters from the private sector. The ending stocks estimate for MY 2020/21 has been adjusted to 258,000 60-kg bags, following an increase in demand from Europe. The MY 2021/22 forecast for ending stocks is 91,000 60-kg bags, a 65% decrease compared to MY 2020/21 in line with the production reduction in 2020/21, due to the impact of storms ETA and IOTA and to higher international export prices.
Alexis Rubinstein
