As 2022 gets started and we are halfway through the coffee harvest, we had a chat with Ricardo Cheves, CEO of Dinámica Coffee. He kindly gave us an update on the current situation in coffee production and trading worldwide. We also spoke about the current situations affecting Guatemala.
Ricardo explained to us how he visualizes this new harvest from an exporter’s perspective: Production in Guatemala has maintained similar to the last harvest. Many producers changed to other crops before this harvest while others remained with coffee. While the coffee price rose a whopping 80% in the last 3 months of 2021, the expectation is that it will bring inventories to an equilibrium with coffee consumption.
Brazil got hit by freezing temperatures followed by drought and then flooding. This makes people think that there won’t be enough coffee and it shoots the price up in general, as Brazil influences the price of arabica by a lot. Brazil is currently operating at 70% to 80 % of its capacity and they are planting more coffee for future supply. We expect over production of Brazilian coffee in the near future.
From a Guatemalan producer’s perspective, there's a great opportunity to sell coffee at higher prices. Producers who already had their crops ready to be harvested were benefited by this, actually most of the people in Guatemala have been benefited by this rise, Ricardo said. Guatemala provides different qualities of coffee and high altitude coffee starts to be harvested in December, which means it benefited the most. Exporters benefited too, but there are challenges to face in this new harvest. The need to find double lines of financing rose and there’s the container problem, mostly being faced by importers. In general, higher prices represent more benefits for producing countries, Ricardo mentioned.
Dinámica’s role for the 21-22 harvest season is to acquire the best prices for both producers and importers, while also maintaining the best quality standards at the dry mill. Now it’s a moment not to grow or expand but to maintain ourselves balanced between the customers in Guatemala and the customers abroad, mentioned Ricardo.
For us at Dinámica, we are really excited about the Harvest 21-22 and the opportunities it’ll bring to Guatemalan producers as the prices are high. We are happy about 2021 results, and looking forward to a fruitful new year, full of positivity. With more than 15% of the harvest 21-22 completed and 85% of it remaining in the following months, we can only be grateful that the year 2022 is looking great!
By: Andres Ranero