Welcome to Q1 of 2024. As we bring in the last of our Peru & launch into Ethiopia, Mexico, & Kenya seasons, we also see logistical shocks due to both war & weather buoying the C market, while coffee stocks at origin remain high. On our end, we’re confident & ready to bring in all the first fruits of the origins we know and love, as well as a couple new ventures. For details on all this as well as every origin in which we work, read on. Click here to listen.
Logistics, Port, & Warehouse Updates
By far the biggest story impacting global trade & shipping logistics is the escalating situation in the Red Sea, where Iranian-backed Houthi groups based in Yemen have repeatedly launched missile & drone attacks on commercial shipping vessels beginning in November 2023. In December, all major ocean freight carriers paused or diverted sailings through the Suez Canal, choosing instead to route containers around southern Africa & the Cape of Good Hope. While some commercial vessels have resumed sailings, container ship traffic through the Suez Canal was down 90% in the first week of January. The situation is very much in flux & evolving by the hour & threatens potentially massive disruptions to global trade.
Routing a container ship around the Cape of Good Hope, the biggest alternative route to the Suez, can add a million dollars in fuel costs & 7-10 days of transit time in the best case scenario. But the Cape route frequently sees rough, windy conditions & weather-related delays. Increases in transit times for so many vessels on such a large scale could lead to port bottlenecks, shortfalls in available vessels, longer transshipment times, & more unreliability in bookings, particularly as global shipping volume seasonally increases before the Lunar New Year on February 10th. Freight rates in all shipping lanes have increased dramatically since the Houthi attacks began, & carriers received special permission from the US Federal Maritime Commission to implement emergency contingency surcharges due to the Red Sea situation.
The US & international allies have pledged to restore safety to the Suez shipping route & have increased military presence in the Red Sea to intercept Houthi attacks. On Thursday last week, the US and UK began direct missile attacks on Houthi targets in Yemen, a new development in an increasingly precarious situation, as they attempt to prevent the regional conflict from escalating. It remains unclear what resolution will look like & what the timeline & continued impacts on global logistics will be.
All of this arrives on top of a historic drought affecting water levels in the Panama Canal, restricting the volume of shipping traffic on routes that pass through Panama. We will be monitoring these significant disruptions as our Ethiopia & Kenya buying seasons ramp up in the coming months.
Supply, Demand, & The C Market
The C market rose to $2/lb before settling around $1.80/lb at the time of writing. Even though global stocks at origin still seem to be high according to reports, fear of logistical issues due to weather & war (as detailed earlier) seem to be keeping the market propped up for now.
Bolivia
Our return to Bolivia was a smashing success this past season as we sourced & delivered quintessential examples of washed Caranavi coffees along with some of the very best anaerobically processed naturals we’ve ever brought in.
We look forward to growing our pipeline in Caranavi this coming season with more availability to roasters across North America. Harvest will begin mid-summer. Look for a detailed update in Q2.
Available Lots
We have extremely minimal spot positions available in CA, NJ, & TX. We also just purchased an additional 80 bags of anaerobic natural, split between Catuai and Java, due to superb quality—so if you missed the first boat, there’s more being milled for you to scoop up. Reach out to your reps today or you’ll likely have to wait until next season.
Tanzania
A new origin for Red Fox, Tanzania has mostly been categorized in the specialty world as an origin capable of producing spectacular coffee, but not necessarily worth the logistical headache of bringing in. Tanzania coffees move through Dar es Salaam, a port notorious for delays compounded by extremely high temperatures & humidity. With the harvest typically starting in October & ending in February, we feel fortunate that our coffees should be on the water before the end of January & we’re hopeful of arrival by early March.
This year’s crop was expected to be 10-15% larger than average due to a good rainy season & longer maturation time for coffee cherries. Prices have held for good quality washed coffees, and mills are seeing an average of 9-12% PB, 35-50% AB, & 15% AA screen sizes. Our export partners say that this is the best quality crop in the last 5 years, with “…Coops gaining more experience in processing & giving better attention to drying,” according to a key trade partner. Stay tuned for an extensive newsletter about Tanzania & these coffees.
Available Lots
We sourced AA, AB, & PB separations from 2 small community groups. Coffee from Umalila & Nsoga Iwezya will be arriving in NJ & transferred to clients’ desired warehouses. Reach out to your reps for details/availability!
Ethiopia
The Ethiopian trade continues to dig itself out of a long position of leftover coffees from 22/23. Larger private washing station owners entered last season’s fray with inflated cherry prices looking to corner markets. This, coupled with high government-mandated minimum prices, led buyers recovering from 2020’s economic woes & 2021’s high C market levels to look elsewhere to fulfill their needs.
All of this will have a significant impact on the 23/24 harvest, which has been delayed coming into Addis. Working capital is at a premium this year with endless funds tied up in last season’s unshipped coffee. Expectations are for roughly half the volume of washed coffee available this crop. Strong quality control measures will be of even greater importance this year than recent years as the last crop needs to leave the country one way or another.
Aleco is now in-country & we will provide a detailed addendum to our Q1 Quarterly Report in the coming weeks.
Available Lots
We currently have roughly a couple hundred bags of G1 stock in NJ, CA, & TX that are absolutely shining at the moment. These lots are priced to move & will make excellent menu holdover additions as the new crop sees delays.
Kenya
With an expected main crop of 650k bags, harvest is in full swing as we’re seeing the very start of top lots being delivered from Kirinyaga, Muranga, & Nyeri counties. Rains in November & December have led to slightly lower yields (down 15-20% especially in SL varieties), though this typically leads to better quality in processing as the stations aren’t overwhelmed with volumes.
Despite the challenges of shifting supply chain protocols under the Kenyan government, we’ve been assured by our partners that 2024 should see smooth acquisitions in Kenya. We’re committed to getting coffees on the water quickly, & as in 2023 we have already selected lots for our first container & anticipate early spring arrivals. Our team will be looking to land wonderful coffees on both coasts with indications that pricing should be similar to last harvest.
Available Lots
We’ve got 12 bags of Gicherori AB in NJ, despite it being one of our favorite washing stations year over year. In CA we have 4 bags of Gicherori AA, as well as 11 bags of Kangurumai AB & 14. These lots are still tasting sweet, cupping clean, & will hold you over until fresh crop arrives.
Mexico
Our team in Mexico is very busy on the ground this month making visits across the growing regions, getting harvest updates and meeting with farmers, including Puebla with new sources from which we hope to see lots of growth this year.
Harvest has begun with mixed news. One major challenge across all regions is labor shortages. Reduced local cherry and parchment pricing at start of season has been a huge disincentive, and workers have either emigrated north or found other work to pay the bills. Where farmers can find workers, the minimum wage has also continued to rise, putting pressure on farmers’ already squeezed profitability.
In Chiapas, where labor has traditionally involved migrant workers coming over from Guatemala, the ongoing border closures and increasing violence in the state has contributed to even worse labor shortages this year for picking cherry, despite an otherwise large projected harvest. According to some supply chain and trade partners in Chiapas, the violence sadly continues to get worse and armed conflicts in the streets between powerful cartels are almost a daily occurrence. People in the vulnerable rural, remote areas near the border are living in constant fear and many have left the state and moved north if possible. Local coffee buyers in the small towns around the farms, who usually provide a very important source of liquidity and cash flow especially in the early part of the harvest, have closed shop and are not buying coffee.
In Veracruz, harvest started very early and went very strong in late November and early December. Now, cold weather and rains coming off of the Gulf have completely stalled harvest in the higher altitude areas which normally see full harvest by mid-January. Lower altitude farms are finished for the season. If and when the sun decides to come out to finish ripening, harvest will likely be pushed into late February and March.
Oaxaca seems an area of positive news, with harvest volumes looking strong and level compared to last year and good weather that’s helped ripening. Most farms are entering the main harvest now which will last until early- or mid-March in most areas and a little later in the Sierra Norte which sees later rains.
Available Lots
NJ has a nice range including some top Oaxaca lots as well as a couple of the first lots from Puebla we purchased in 2023, still in stock and cupping beautifully.
Peru
Peru shipping season is closing out with our final containers going afloat this week. In many ways, 2023 was a smoother season than 2021 & 2022: coffee prices came back into orbit & shipping logistics were exceptionally smooth. The challenge this year was in quality control. Many coffee producers held onto their coffee from the 2022 season with the hope that prices would come back up. In the beginning of the 2023 season, we filtered out a lot of past-crop coffee. We also saw a lot of coffee berry borer (broca) damage in the dry mill as a result of a lengthy drought in southern Peru this season, which affected milling yields. Fortunately we have a robust quality control team in Peru & were able to comply with our internal quality standards & fulfill our projected volume.
Available Lots
Fresh Peru lots are stripping in now & will continue to arrive into February. We’ll be flush with fresh, high-quality coffees for all menu positions through the spring.
Colombia
We are currently in between Colombia harvests as purchases from the 2nd semester have concluded & we await 2024’s 1st semester crop. Differentials continue to fall substantially from 2021 as prices come back down. In contrast to the rainy conditions that have plagued Colombia in recent seasons, a forecast for dryer months ahead will hopefully lead to a strong ripening cycle for the May/June harvest. Flowering has been strong in both Inzá & Nariño.
We’ll have a more detailed update in Q2 as the harvest is about to commence.
Available Lots
We kept our 2023 acquisitions lean as quality standards across Colombia plummeted post-2022 market spike. We have under 50 bags available in both NJ & CA. Decaf reinforcements will hit all 3 warehouses come spring.
Rwanda
We had a successful Rwanda season last year, with minimal shipping delays—all our fresh crop arrivals were stocked & available to release on the US East Coast by mid-November, & on the West Coast by mid-December. It was so nice to get these beautiful coffees into our clients’ hands before the holidays.
Looking ahead to the next harvest season, Rwanda has seen regular rainfall since early October, which is generally good for coffee production, but also increases the risk of landslides in the country. This month the Western district experienced a landslide due to heavy rains, but so far nothing has been as devastating as last year’s torrential rains & flooding in April/May.
Quality & volume expectations for the upcoming season are good. Country-wide the crop volume is expected to be higher than last year. In Nyamasheke district, forecasts are for a higher-yield cycle as well. It’s too early for pricing indications for the season, but inflation in Rwanda remains high, though it is trending down from a peak of 21.7% in November 2022. Last month’s inflation rate was 6.4%, down from 9.2% in November 2023. The country’s central bank expects rates to continue to fall in 2024.
Available Lots
We have just a handful of bags still available from our fresh crop Rwanda offerings this year. There are 19 bags of Kanzu Lot #21 in CA & 24 bags of the same lot (#21) available in NJ. If you missed booking Rwanda this year, get these before they’re gone. They’re cupping with notes of lemon curd, shortbread, dark cherry, & sweet plum.
Guatemala
The harvest is underway in Guatemala. One of our sourcing partners reports that picking began for coffees grown below 1500m starting in the second week of December. An unseasonable cold snap has delayed processing & slowed higher elevation maturation though we expect to see the same high quality as last year regardless.
Labor shortages continue to be an issue despite a 6% increase to the minimum wage. “Many migrant workers continue to leave Guatemala for the US,” reports a key trade partner. This especially affects medium to large estates which depend on migrant labor for picking. In other regions such as New Oriente this is especially challenging.
While we are bringing in many of the same lots this harvest, we are also expanding our reach in Huehuetenango by exploring new communities. Expect new arrivals come summer.
Available Lots
There are currently 35 bags San Jose Poaquil available at Continental in NJ.
| Interested in sourcing coffee with us? Reach out at info@redfoxcoffeemerchants.com. To learn more about our work, check out our journal and follow us on Instagram @redfoxcoffeemerchants, Twitter @redfoxcoffee, Spotify, and YouTube. |