Global Arabica Coffee Bean Shortage Drives Colombian Coffee Spot Prices to Ten-Year High

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Colombia Coffee Production Faces Challenges

The Colombian Coffee Growers Federation (FNC) recently stated that the government's social isolation policies have led to a shortage of coffee harvesting labor in coffee estates and growing areas. Combined with heavy rainfall that has persisted for two months, this will result in reduced Colombian coffee bean production in the first half of 2021.

According to local meteorological departments, from March 1st to March 31st, coffee-producing areas in central and southern Colombia experienced heavy rainfall, with cumulative precipitation reaching 300 millimeters—nearly 100 millimeters more than the historical average for the same period. Colombia's specialty coffee beans are primarily concentrated in the southern regions, with familiar producing areas such as Huila, Cauca, Nariño, and Tolima all located at altitudes above 1,500 meters in southern Colombia.

(Left: Colombia rainfall in March 2021, Right: Colombia rainfall in March 2020)

In mid-February, the Colombian Coffee Growers Federation (FNC) predicted Colombia's coffee production for the first half of 2021 to be between 5.5 and 6.5 million bags (60 kg per bag), a 6.9% decrease compared to the same period in 2020. However, they also indicated that COVID-19 isolation policies and heavy rainfall would improve in the second half of 2021, predicting that Colombia's coffee production in the latter half of the year and total production would gradually return to normal levels. In 2020, Colombia's total coffee bean production was 13.90 million bags, 6% less than the previous year. For 2021, the country aims to maintain total coffee bean production at levels comparable to last year.

Since last year, Colombia's coffee spot prices have remained strong due to the depreciation of the Colombian peso and the increase in premium levels from 20 cents per pound to 45-50 cents per pound. Additionally, Brazil's arabica coffee production forecasts have continuously declined due to various factors. Coffee futures have risen by 22% since last October's low, with spot price premiums for Latin American washed coffee beans continuing to increase. Colombia's coffee spot price premiums have even reached their highest levels in nearly a decade.

(Top: Colombian coffee spot price trends, Bottom: International coffee futures price trends)

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