January 28, 2021

Latin American coffee growers maintain their prices and the market despite the COVID-19



The coffee sector in Latin America, origin of the largest production in the world, supports the onslaught of coronavirus with difficulties in harvesting due to labor shortages but in a positive situation due to increased consumption of coffee in the home, which has improved product prices, among other factors.

The president of the Conselho dos Exportadores de Café do Brasil (Cecafé), Nelson Carvalhaes, told Efe that the sector is in a positive situation “due to the reduction in inventories in the world market and the increase in household consumption, even during this period of pandemic, which contributed to a price improvement. ”

“At the moment, Brazilian coffee exports to the world are occurring normally. The expectation for the coming months is to continue with a positive rhythm of exports,” he said.

In other countries, however, such as Honduras, COVID-19 affected the collection of 10% of coffee production in the highest areas of the country, the best quality, Efe was the executive secretary of the National Coffee Council of there, Omar Funez.

While in Colombia the impact “has been more due to a shortage of labor”, which “it was feared” could be reflected “now that the harvest in the middle of the year is beginning to reap,” the general manager of the National Federation told Efe Colombian Coffee Growers (FNC), Roberto Vélez Vallejo.

PRICES AND DEVALUATION

The price of coffee in all producing countries varies according to the differentials in relation to the stock market price. However, prices in the New York parquet have advanced by a monthly average from 91.6 cents per pound in April 2019 to $ 1.13 in the same month of 2020. Last December, the value of 1 , $ 29 per pound.

The manager of Marketing and Innovation at Expocafé, Alejandro Lozano, considered in statements to Efe in Colombia that “the devaluation will always be the best friend of exports and is an opportunity to capitalize.”

“Despite the improvement in domestic prices through devaluation and the rise in the price of arabica coffee on the New York Stock Exchange, the price effect is affected by the decrease in production and by the adverse effect given the higher prices imported fertilizers, “he analyzed.

Vélez highlighted that “Colombia has benefited from a devaluation of the peso”, but also from “an increase in the differential or the premium paid for Colombian coffee in the international market, which today is on the sides of fifty cents of dollar”.

“In relation to other basic products, the coffee market is in a more favorable situation. This keeps the prices applied by the New York Stock Exchange positive for the sector,” said Carvalhaes.

For his part, Funez said that in his country “the exchange rate between the lempira and the dollar has remained stable, so it has had no effect on the coffee market,” although with current prices they are reaching “the breakeven”.

COFFEE, “A GREAT PARTNER IN TIMES OF CRISIS”

Carvalhaes highlighted that with low interest rates and the existing credit for the producer of Brazil, a country that owns almost 40% of the world coffee market, the crops and the commercial structure will continue to “function properly, helping to keep up the pace of exports ”

“Coffee has always been a great companion in times of crisis and perhaps it affects less than other basic products,” he added.

Roberto Vélez was “very optimistic” with a production scenario in Colombia of 14 million bags, since with these price levels “the coffee harvest will go from 7.2 trillion pesos (about $ 1.8 billion) from 2019 to more than 9 trillion pesos in 2020 (about 2,200 million dollars), almost 30% more income in the hands of the coffee sector. ”

“We are the most privileged sector in Colombia today, while everyone is suffering from the coffee grower, at least today they have a profitable business,” Efe acknowledged.

A COFFEE AWAY FROM HOME

The specialty coffee market, according to Nelson Carvalhaes, “will undoubtedly feel the impact of reduced demand”, and in general terms “it is still too early for any projection, due to the uncertainties that the pandemic brings us, but everything indicates that It will be difficult months. ”

The Honduran Funez pointed out that COVID-19 “will affect the demand for the aromatic in consuming countries and nationally; the distribution channels and market segments with the highest participation for the different types of coffee will change, since most of the coffee shops are closed. ”

“Traditionally, coffee consumption is made two-thirds at home and a third outside the house, that third has been basically dead during all this time (…) specialty coffees have had much more market in the segment outside the home. home, there is going to be an affectation we do not know what size “, concluded the Colombian Roberto Vélez Vallejo.

Daniel Salazar Castellanos

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