Central American coffee loses premium, despite fresh disease fears

15.06.2017

Prices of so-called "other mild" arabica coffee, produced in the main in Central America, extended their discount to Colombian mild beans to the highest in years, despite worries over a fresh disease outbreak in Honduras.

The price of other mild beans - grown mainly in the likes of Guatemala, Mexico and Honduras, but also in southern Africa and some Caribbean islands – extended their recent decline to hit 144.80 cents a pound on Wednesday, according to the International Coffee Organization.

The drop expanded to 3.16 cents a pound their discount to mild arabica beans produced in Colombia which only last month began to regain their premium after a three-year period when the dent to Central American supplies from the outbreak of the coffee rust, or roya, fungus gave values of other milds the upper hand.

In March last year, Colombian milds fell to a discount of more than 12 cents a pound.

Recovering exports

"While Colombia was successfully increasing its output through replanting programmes, producers of other milds… were negatively affected by the outbreak of coffee leaf rust," the ICO said.

"This led to lower supplies of other milds, resulting in higher prices."

However, with output in much of Central America, as well as Peru, now on the rise, the extra supplies have lost the variety its premium.

Indeed, exports of other mild arabica coffee "in the period May 2016 to April 2017 grew by 9.4% compared to the previous year, while the previously strong growth in exports of Colombian milds levelled off", the ICO noted.

'Harvest is at risk'

Still, the comments come amid fresh worries over the rust, or roya, fungus, which can devastate crops, leading to tree defoliation and potentially death.

"Reports from Honduras indicate the possibility of a new coffee leaf rust outbreak," the ICO noted.

IHCafe, the coffee institute for Honduras, Central America's top coffee grower and exporter, confirmed in April that rust had been found on one variety, Lempira, which has been planted for years as a type resistant to roya.

"The 2017-18 harvest is at risk because of rust," US Department of Agriculture staff in Honduras said in a briefing drawn up ahead of the latest edition of a twice-yearly USDA coffee report, due on Friday.

El Nino help

The continuing decline in the price of other milds looks a sign that traders are "relaxed" over the danger posed by the roya outbreak.

"There doesn't seem to be evidence of any serious damage," the trader said, also noting that, with it being a potential El Nino year, Honduran plantations might see relatively dry conditions unfavourable for the spread of the fungus.

The USDA officials in Honduras forecast a rise in Honduran coffee output in 2017-18 to a record 6.52m bags, even taking "into account the risk of coffee leaf rust's effect on this harvest", with the extra output a reflection of increasing plantation area.


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