Colombian coffee exports rise despite lower production and prices

Published on 13 May 2019

The value of shipments of grain from the South American country to the rest of the world has increased considerably during the first two months of the year.

Despite not being the world's leading producer, Colombia is known as the coffee country because of the importance of grain for its economy. After oil and its derivatives, and coal, it is by far its main export product.

Therefore, any reduction in the harvest will always be a major concern: although it may be compensated by a higher price level, it will generate uncertainty until the moment when the sales contracts are closed. So far in 2019, shipments of Colombian coffee to the rest of the world have performed well, as reported in the following table.

It should be noted that the increase in revenues generated by sales of Colombian coffee abroad is due to higher sales. The drop in the average price received per unit that went from fluctuate in a range of US $ 1.17 to US $ 1.30 per pound between January and February 2018, to one of US $ 0.95 and US $ 1.07 in the same period of this year.
Regarding the harvest, a note from Reuters highlights that according to information from the National Federation of Coffee Growers, a production of 2.4 million bags was reached in the first two months of the year, 2.5% more than in 2018, but that in February A fall has been recorded. Compared to the same month last year, production has dropped 8.7%, reaching 1.1 million bags, after having risen 14.6% in January compared to the previous year, reaching 1.29 million bags.

The fall in prices is due to the increase in Brazilian production. However, this last country produces mainly the variety known as robusta, while Colombia focuses on the Arabica variety. For this reason, Colombian producers have proposed that quotations be independent to separate by type of grain. However, the industry mixes both varieties in the final products, making it difficult to form a critical mass large enough to independently price, despite the existence of a fraction of buyers focused on a single variety.

The main market is the United States, so prices are determined in New York. Meanwhile, specialized demand niches are not enough to absorb Colombian production. In the following chart, which shows the main destinations, the importance of the North American country is evident.

The challenge ahead is to promote the reduction of the social consequences of the balance between supply and demand, which will possibly involve the transfer of producers to other crops or economic activities. At the same time, productivity will always be a challenge to face in order to assume more challenging conditions to cover costs.

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