As we close out a complex quarter in a complex year & head into Q1 of 2025, we’re looking forward to the early shipment & arrival of gorgeous East Africa origins amidst a continuously changing & challenging pricing & logistics landscape. Our strategy remains: a sharp focus on adding value everywhere we can, tight logistics, & constant communication. Read on for a deep dive into logistics, the C market, the trade, & every origin in which we work. To listen, click here!
Logistics, Port, & Warehouse Updates
The global ocean freight market faces more complex challenges than ever as we head into 2025. Ongoing disruptions & delays in the Red Sea & Panama Canal show few signs of improvement. The Suez Canal is not expected to resume normal operations in 2025. Vessels will continue to route around the Cape of Good Hope with longer transit times & additional fuel surcharges. Ports in Brazil, Colombia, & Asia are experiencing heavy congestion. New potential US tariffs could introduce uncertainty in trade patterns & drive up freight rates. Shippers have been front-loading shipments in anticipation of US Inauguration Day, leading to record volumes of cargo at West Coast ports. New shipping alliances (Gemini & Premier) are set to launch on February 1, which is expected to temporarily affect vessel schedules & capacity while shipping lines reconfigure their operations.
One source of uncertainty was resolved when, on January 8th, just a week before the existing contract extension was set to expire, the International Longshoremen’s Association (ILA) & the United States Maritime Alliance (USMX) reached a tentative agreement for a new 6-year contract, avoiding another potential strike. Both parties will continue operating under the current contract until the new one is ratified. The agreement includes a resolution regarding automation at ports—a sticking point in prior negotiations—which “protects current ILA jobs & establishes a framework for implementing technologies that will create more jobs while modernizing East & Gulf coast ports.” The ILA strike in October last year halted cargo flow through ports up & down the US East & Gulf coast for 3 days. ILA members returned to work after securing a 62% increase in wages over 6 years.
Supply, Demand, & The C Market
This past quarter has truly been a whirlwind on the C market & supply fronts. As much as we like to focus on simply paying the best possible prices we can irrespective of the C market as both a sourcing strategy & a fair business practice, intense fluctuations of the C market still affect our operations tremendously. This quarter it was as volatile as we’ve ever seen it, & that affected both the trade at large & even our niche of top-tier specialty.
Factors that contributed to that volatility included:
- Pending implementation of & last minute delay to the EUDR (EU Regulation on Deforestation-Free Products).
- Continued drought & harvest issues in Brazil, causing continued shrinking of green coffee stocks.
- Spot coffee still priced higher than future terminal months, causing a continued liquidity crunch.
Let’s dig in one by one.
First, EUDR was scheduled to go into effect beginning this year. This would have caused a major shift in traceability documentation for farmers selling into the EU. For anyone who has visited our supply chains in Peru & Mexico, you can imagine the additional stressors this regulation would cause on anyone involved in mapping smallholder farmers & how their 5-20 bag harvests were bulked into larger regional multi-container load lots. At the last minute, due to an overwhelming wave of complaints on how EUDR would cripple suppliers’ ability to deliver, regulators decided to delay implementation for a year. The C market spiked to 50-year high over 350/lb toward the end of 2024 as the race to beat EUDR enactment created a demand surge prior to year end.
Second, Brazil continues to struggle with their harvest & drought is still crippling yields, causing huge short term demand as green coffee stocks continue to dwindle.
Third, & all of these are related, near terminal month C market prices continue to be higher than later terminal months. In fact, the spread between terminal months only seems to have grown. Pre-pandemic it was regularly around 2-3 cts/lb, & that spread has grown to 5-7ct/lb. Spot coffee is more expensive than future coffee to the highest degree we’ve ever seen, meaning more capital is tied up in order to purchase coffee now & there’s less money to buy future coffee. That’s causing a liquidity crunch, often felt hardest by those trading in the middle taking large positions.
Red Fox has navigated this period methodically. We’ve been incredibly thoughtful about the positions we take, keeping the quality of not just our coffee but also of our supply chains, logistics, & communication as our focal point. At time of writing, the market is trading around 315/lb. The days of sub-$4/lb coffee are behind us for now & today’s discussions feel very much centered around sub-$5 or over-$5/lb, even when talking about blend-friendly lots. We’re still focused on providing the same value adds at every link of the supply chain & are here to strategize with you as we all meet this moment together.
Ethiopia
Ethiopia season started earlier than ever with many actors in the trade pushing for December & January shipments. National banks have not offered lending to the coffee sector. Most exporters are operating with only their own cash reserves, creating a push to move coffees out of Djibouti as quickly as possible. Liquidity will be a key theme across the industry in 2025 & it’s as apparent in Addis as anywhere else.
We’re back to Ethiopia for the second time in 2 months now finalizing first shipments & sifting through stock lot arrivals in Addis for the next purchasing rounds.
The Ethiopian government continues its minimum FOB price mandate with higher levels than we’ve seen in the past. That said, Grade 2 & 3 qualities appear to offer the greatest values in our industry at the moment as Brazilian shipments trickle out on a monthly basis.
Harvest itself continues at the high elevations in both the south & the west. Rumors of an exceedingly early harvest were nothing more than a push from the trade to bring cash back into the country via early shipments. Washed coffee will be limited due to a lack of liquidity at washing stations. Naturals are just beginning to make their way into the capital now.
The port situation appears somewhat stable at the moment though we will once again be moving the majority of our shipments through less conventional vessel routes. We expect container availability to become an issue in the next 30-60 days but will keep a close eye on & manage the situation as relates to us.
Available Lots
While we are effectively sold out from last season, our first shipments go afloat at the end of the week. Supplemental shipments will go afloat in February & likely March as well. Expect a large supply of G1 gems & G2/G3 values.
More generally, you should always fully expect fresh Ethiopian coffee stateside by early spring. Don’t be fooled—aged fall arrivals won’t last longer just because they arrive later, & they don’t need to be your normal.
Mexico
Mexico’s harvest has begun in full force all across the country as of early January, including higher altitude regions. Plentiful off-season rains mean expectations of a strong harvest in most areas. This is especially true in Veracruz, which had a weaker harvest than usual last year.
Some parts of Oaxaca like Sierra Sur & Mixteca are reporting slightly decreased harvest projections, likely due to the biannual cyclic nature of Bourbon & Typica varieties prevalent there. Sierra Norte looks strong based on our initial visits to production areas & farmer visits.
The main concern continues to be labor costs & shortages. This is especially tough in Chiapas where our cooperative partners say farmers are struggling to contract enough seasonal migrant labor to pick all their cherry again this year, limiting their sales & projected export volumes. This condition persists despite relatively very high prices tracking with the increased C market to start the season.
The 2025 harvest also comes at a time of some uncertainty for the trade, with the impending new US presidential administration planning to impose 25% tariffs on goods imported from Mexico. We’ll be monitoring this closely in the coming months as coffees get ready for shipping.
Available Lots
We are sold out of the 2024 harvest coffees from Mexico in all warehouses, but expect fresh crop in May 2025, keep an eye out for forward booking opportunities in the coming months!
Tanzania
With our first deliveries from Tanzania en route to the USA, we couldn’t be more thrilled to share a new origin for Red Fox with our customers. These coffees will expand our catalogue from East Africa nicely with new profiles & delivery during a time of year where we all are starved for variety when it comes to fresh coffees.
The incoming lots from Mara & Arusha areas are balanced & delicious. We describe these lots as “everyday drinkers” that check all the boxes for those who are looking for clean sweet coffees without sacrificing structure, character, & nuance.
We hope that these coffees will arrive around the same time as our first Kenya shipment, & both will be available for customers wanting coffees early for spring menus.
Reach out to our sales team as there’s only a small quantity left!
Available Lots
Tarime AA & AB, as well as some Burka AB are still available, though moving quickly.
Kenya
The Nairobi Coffee Exchange continues to be the primary place for acquisitions by exporters & brokers. This early season has already seen a massive amount of coffee purchased & traded. Although harvest is early, weather patterns have caused the majority of the coffee to ripen quickly. Our partners believe the majority of the coffee has been picked, & that the coffees won’t be trickling in as slowly as usual. This combined with high auction prices has led to a ton of coffee being delivered all at once.
Thankfully, quality has remained high this season & our team was able to approve half of this year’s position before holiday break. These containers are mostly made up of stunning coffees from Muranga county with ripe, sweet profiles sure to bring some smiles after winter. We expect first containers to arrive early March, with the second half coming later in the spring.
Reach out to your reps to forward book these coffees now!
Available Lots
We’ll be landing coffees primarily from Muranga County in the first boxes. Kayu, Kirimahiga, Gondo, Marimira & Gitura are some highlights. We’ve also got one early delivery of Nyeri Gacatha AB to look forward to.
Bolivia
The Bolivia harvest has now fully concluded. Our last shipment of the season is being prepared at our supply chain partner’s new dry mill in La Paz. We’re very happy with the progress we saw in Bolivia this season despite a few logistical hiccups along the way. We expect even more growth from next season’s harvest, which will kick off early this coming summer.
Available Lots
Our very best values at the moment are our Bolivian lots at Continental Terminals NJ. Very solid quality on both the washed & natural front at very competitive pricing. Talk to your reps if you have a menu hole to fill.
Peru
The 2024 Peru season, which saw substantial challenges for our sourcing team & a top-quality end result, has finally concluded. Complicating factors included the constant rise & volatility of the C market, speculation on internal prices in the local market, & pending EUDR regulations for 2025 (now thankfully officially postponed to 2026). Despite quality concerns due to high C market prices which can often cause dips in quality due to farmer carelessness, quality was actually even higher than last season across the country. Our last container left port in the first week of January loaded with the final high-altitude batches from Puno. Our sourcing partners are now in the process of visiting producers to get harvest estimates for the 2025 season & pass certification audits over the coming months. While rains in the production areas are a little late, it’s too early to assume this delay will affect the 2025 crop.
The past season’s biggest challenge was high competition in the local market led by cash-in-hand buyers. Many local buyers offered prices well above the local market price to cover contracts required to enter European land before 2025 EUDR implementation. Other local buyers raised prices in hopes that the market would continue to rise & they’d be able to sell at a higher price later (speculation), which ultimately did happen.
Many producers from various associations chose to sell their coffee for high prices & fast cash on the spot over the slower option of the producer associations with which they had worked for years, who had invested time & capital into their coffee quality. Many associations lacked the necessary liquidity to beat local prices with cash in hand as the market climbed. Several associations defaulted on commitments to various exporters across the country. We saw producers ask for coffee they had already sent to producer association warehouses for approval because someone else had just offered them a higher price on the street. Some cooperatives also chose to default on contracts in order to sell their coffee to the highest bidder as the season progressed.
Another challenge was the lack of containers & ships. Almost all shipping companies had capacity issues & we saw an increase in rolled containers.
Our sourcing team fine-tuned its logistics strategy, prioritizing the rapid movement of coffee from field to port & onto the water to avoid losing coffee along the way. The container pinch meant our logistics work didn’t end when coffee arrived at port—we had to ensure it was actually loaded on the nearest ship with the shortest transit time. This speed & focus involved coordinated effort from the entire sourcing team to align everyone’s tasks toward the core goal of meeting our commitments.
It was a challenging season for everyone—us & our sourcing partners—but we all dealt with it as best we could using the tools we had at hand, including speed, coordination, & communication as well as years of relationship building.
Available Lots
We have a lean spot position as coffees have been snapped up on arrival, & final containers on the way & arriving shortly. Seize the moment on these fresh lots before they’re gone.
Colombia
Market volatility had been aggressive & affected all buyers. As in Peru (although it didn’t impact our Colombia operations this year), high prices & intense competition & speculation by cash buyers has plagued producer associations looking to fill contracts while facing lack of liquidity & high competition.
Producers, while grappling with some of the world’s highest inflation rates, continue to mostly reap the rewards of a high C market. Although financially rewarding for producers, coffee’s high prices have created issues for them as well, as criminal entities see an opportunity to enrich themselves at farmers’ expense. In some areas criminals are taking control, extorting producers with quotas in order to “maintain security.” Producers are also struggling against massive inflation to the costs of gasoline, transportation, & harvesting labor. Quality has suffered, both from the incentive of great cash prices for quantity over quality & from these labor shortages.
Colombia’s unstable weather pattern continues. Off-schedule rains have affected farmers’ ability to apply fertilizer at the right time, which has in turn affected flowering. It’s become more difficult to make accurate harvest forecasts.
Available Lots
We’ve got a highly limited slate of curated offerings from Inzá & Nariño available but going fast.
Rwanda
The upcoming 2025 crop in Rwanda is expected to be a higher-yield cycle as long as weather remains beneficial for cherry development over the next couple months. In Nyamasheke, rains started a bit late this season compared with the average rainfall, which generally begins in September, but farmers received fertilizer distributions from C. Dorman & have applied it to their crops. While they wait for coffee harvesting to start, C. Dorman is focusing on repairing infrastructure like drying tables & facilities for wastewater management at washing stations, training lead farmers in good agricultural practices, & refreshing washing station managers on QC & management. Harvest season is expected to start in mid-March & at higher-elevation Kanzu it may run to the end of June.
Available Lots
All of our 2024 season Rwanda lots have arrived. We have just a handful of available bags of Kanzu Natural available in both NJ & CA. These lots are clean & brilliant, with notes of purple plum, cherry, hibiscus, & lemon cream. Reach out to your sales rep with interest before they’re gone!
Guatemala
According to sourcing partners in Guatemala, peak harvest has started in the higher elevations of Huehuetenango as of the new year. Estimated overall yield appears slightly higher (7-10%) than last season.
While labor shortages & high cost of labor continue to be a problem in Guatemala, producers we work with report that picking is going strong.
Available Lots
Containers will be available on both coasts this spring.
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.