Just Back from the RAMACAFE Event in Managua, Nicaragua

Nicaragua’s coffee production and quality standards are in the upswing trend, not only because of the foreign demand for these coffees, but also due to the internal consumption demand.

Cities as Managua, Leon and Granada already offer numerous coffee shops with all kinds of coffee preparations including the best Nicaraguan beans. There are multiple internal marked brands that are very actual regarding their roasting process and packaging, the quality of the coffee is generally very good and in some cases, excellent.

Coffee is still the main product concerning foreign revenue. There are about 30 thousand coffee properties in Nicaragua that produced 1.4 million bags in 08/09 and are expected to produce up to 1.8 million bags for the 09/10 crop.

Nicaragua is in Fact a Coffee pearl with the largest territory within the Central American Countries and an increasing expertise to produce high quality. The potential for this origin is very promising.

Special thanks to Henry and Gabriella Huek for the hospitality and congratulations for the excellent RAMACAFE 2009’s event. It certainly succeeded in promoting Nicaraguan coffee its high quality and dedicated people.

In Brazil, yet another cold and rain front has reached the coffee belt, this, at a very late period during the harvest. It’s the 9th rain front this season! The high humidity level in the atmosphere and mainly in the soil has triggered an extremely early flowering in many zones of the coffee belt.

This phenomenon can promote 2 opposite scenarios:

– A super production coming from multiple flowerings, irregular maturation and a very long harvest season for the 2010/11 crop.

– An uncommonly early re-activation of the coffee tree bio-cycle caused by constant rains promoting excessive plant stress due to none or short hibernation and rest period. The results are loss of flowering, lack of fixation and lower final yield.

In my experience, the second scenario has a big risk of happening, but will be corrected in great part by the producers input manipulating fertilizers and agricultural management to keep the trees super nourished, have many flowers and hold the fruits.

The cost of such a practice will show itself in the 10/11 crop cycle, again a lower yield cycle, aggravated by a “super” stressed plantation scenario. Nevertheless, the Brazilian coffee producers look at high volume as a cost reducing tool. This will drive them through this next potentially high yield cycle for the 09/11 crop and they will push the trees even if it’s towards an abysm.

From Colombia, Hector Posada, from “Wolthers, Vittrup and Associates”, informs that new sales are very thin. The gap between FOB and Spot/USA prices is very large. Local prices are ranging from + 35 to + 40 on UGQ’s making exporter offers seem much unaligned within the same region and day.

Although prices have shown some noticeable reduction, exports are down compared to last year’s figures. The main reason is in fact caused by the aggressive plantation renewal program. Between 50.000 and 70.000 Hectares have been replanted since 2007 and the productivity cycle return and increase is only expected to show positive numbers as follows: 12 – 12.5 million bags by 2010, 13 million bags by 2011 and 16 to 17 million bags for 2014 onwards.

As far as the weather is concerned, normal rains and climatic conditions are helping towards the 11 million bags for the 09/10 crop. The new FNC Leader, Luiz Genaro Munoz, is expected to start a campaign towards the Colombian “Banco da Republica” aimed in stopping the continuous valuation of the Colombian Peso against the US Dollar. If achieved, this could bring more cash internally to coffee producers.

The FNC is also discussing to open a Global Franchise program for the “Juan Valdez”Coffee shops, what a marketing move if confirmed!!!
From Wolthers, Vittrup and Associates, in Guatemala, Hector Gonzalez informs that no pergaminio is on the streets and that the actual export shipments are happening out of exporter inventories. The new crop has not started yet but is expected to be early as the dry weather has been promoting maturation.

Only a few new crop sales have been reported with + 14 FOB for Prime Washed and + 25 for SHB’s. Quality out of Guatemala is expected to be very good, the weather will be the main factor this year, let’s hope the hurricane season ends as is, keeping Central America and all of us clear from now onwards.

Best regards,

Christian Wolthers
Wolthers America Inc.

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