Tag: coffee commodity

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Jamaica to benefit from Coffee futures

Coffee prices referenced on the commodities market are trading near two year highs.

Prices are up 50 per cent since lows of 2019 on news of an expected drop in production going forward, while at the same time met with increased demand from developed nations for coffee.

“World exports are expected down 4.7 million bags to 115.4 million primarily due to lower shipments from Brazil and Honduras,” stated the Coffee: World Markets and Tradereport published this month by the US Department of Agriculture. “With global consumption forecast at a record 166.4 million bags, ending inventories are expected to slip 400,000 bags to 35.0 million.

The report stated that coffee production for 2019/20 is forecast 5.3 million bags (60 kilogrammes) lower than the previous year to 169.3 million, primarily due to Brazil’s Arabica trees entering the off-year of the biennial production cycle.

Arabica coffee futures are now at US$1.31 from just shy of the US$1.38 52 week high but far from the low of US$0.86. It follows on a series of measures which affected demand and supply.

It matters, as the commodity futures give a guide to the directional flow of pricing of most coffees, even those that do not trade on the exchange like luxury Jamaica Blue Mountain. The entire crop of JBM can fit into less than a day’s production in Colombia, so the island’s crop does not affect demand or supply. Buyers in Japan however which accounts for some 70 per cent of total sales of JBM beans will be less likely to pay a premium for JBM if coffee demand overall is down.

“The Japanese are buying again but the prices are not that great,” said a Spokesman for a large farming brand in the Jamaica Blue Mountains.

The data for this year’s total exports of Jamaica Blue Mountain are not yet disclosed.

China continues to grow its consumption with the growth of Luckin Coffee formed in 2017 and listed this year. It continues to add several stores a day now at some 4,280 up over 200 per cent year on year, at the time of this report. It is now the largest chain in China surpassing Starbucks which operates some 4,100 sores in China.

 

dav

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Kingston Coffee Culture

Ten new cafes opened in Kingston over the last 12 months.
Its a record number of cafes in the struggling Jamaican economy. Moreover the city didn’t even drink quality coffee until recently. The farms instead chose to export the best grades to Japan and most Jamaicans drink cheap instant shit.
Reduced export earnings forced farms to find new markets and that new market is domestic. It has resulted in the Starbucks culture finally brewing its way into the island even without a phsyical store presence.
Kingston now probably has about 15-20 proper cafes. Many are within hotels but also on every decent mall. The owner of one of the pioneering cafes said: “Where are most of these cafes now. I expect them to continue disappearing in a year”.

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Jamaica, Kenya , PNG all recovering coffee relatives

coffee plants

Coffee seedlings from the Blue Mountain range in Jamaica spawned commercial coffees from Kenya and Papua New Guinea in the 1900s.

Back in the 1700s coffee was introduced to Jamaica from Martinique according to the Coffee Board of Jamaica. At that time, Martinque a small French territory boasted 16 million coffee plants. Today it remains but a shadow of its former caffinated state.

Interestingly the same fate may meet its three descendant coffee territories as each suffers the one of the worst declines in nearly two decades.

However replanting efforts in Jamaica along with new farming practices in Kenya and PNG supported by loans from the World Bank and secondly its private sector lending arm the IFC respectively aim to resuscitate the sector.

For instance Jamaica’s coffee production is set to decline by half for the upcoming crop, experts indicate. Farmers blame rust disease and abandoned farms based on lower prices since the 2008 Western financial crisis. Ironically prices are now at record levels both on the premium coffee market and coffee commodities exchange . Farmers are clamouring back into the sector but it might take the length of an entire crop to rejuvenate coffee farms–thus creating disequilibrium and higher prices to consumers.

PNG coffee production declined by since coffee commodity prices dipped three years ago according to World Bank. Farmers not surprisingly abandoned farms. Prices are down some 23 per cent since the 90s data indicates.The World Bank will pump US$46 million in PNG agriculture in a campaign in part geared at rejuvenating the coffee industry hit with declining yields. The project aims to increase yields and hopefully pricing by replanting aging trees, some as old as 40 years, training in best practises, providing tools and paving farm-to-market roads.

Interestingly, PNG Blue Mountain Gold coffee sells for one-third of Jamaica Blue Mountain the project aims to cut that divide.

Kenya the 20th largest producer of coffee globally has suffered from a 60 per cent drop in production since the 90s (a similar level as Jamaica compared over same period), IFC data indicates.

” Decreased productivity has been in part the result of reductions in government programs that provide technical advice to farmers. Small farmers—responsible for about three-quarters of Kenya’s coffee production—have been most affected by the reduction in government support,” according to the IFC in its 2013 document Rebuilding the Kenyan Coffee Sector,

The IFC project aims to train hundreds of key farmers to in turn train thousands in best practices. Its a serious move that ultimately aims at double farmer annual income

“The project is expected to reach 9,000 farmers and raise their yield per bush to between four and five kilograms of cherry, resulting in an additional 120 kilograms of beans. This productivity gain should help more than double the gross annual income of a typical grower from less than $200 to $475,” stated the IFC in its document.

The African state sells its own Kenya Blue Mountain coffee.

The good news is that coffee from these three nations should recover and provide a decent living for thousands of farmers, whilst providing the perfect cup.