Weekly Coffee News
April 08, 2015
Port of Oakland says most diverted vessels have returned
In one of the more positive developments to affect West Coast ports since the announcement of a tentative coastwide longshore contract on Feb. 20, the Port of Oakland reported Tuesday that vessels which had been by-passing the Northern California port to keep on schedule have mostly returned.
“Some vessels that were omitting Oakland have already started to return, and a look at schedules indicates that the rest will be back soon,” said John Driscoll, the port’s maritime director.
All West Coast ports have grappled with congestion and vessel backlogs since early November during labor disruptions associated with the contract negotiations between the International Longshore and Warehouse Union and the Pacific Maritime Association. An ILWU caucus in San Francisco on Friday voted overwhelmingly to recommend general membership approval of the tentative agreement that was reached on Feb. 20. Voting will be held next month, with the results to be announced on May 22.
More than two dozen vessels bypassed Oakland in January and February to maintain schedule integrity. Now that carriers are returning to their normal trans-Pacific rotations, importers and exporters in Northern California can resume their standard supply chain practices.
This will certainly help to boost Oakland’s cargo volumes. Vessel by-passes contributed to a 31.6 percent decline in container volume in January and February.
Oakland’s two largest container lines, Maersk Line and Mediterranean Shipping Co., have already resumed Oakland calls. The G6 alliance has restored two services and plans to restore two more in April. The CKYHE alliance will be back on its normal schedule by early May, Oakland reported.
The port continues to work with terminal operators and trucking companies to improve gate fluidity. Some trucking companies report their drivers are spending too much time in long lines outside the terminal gates. Port spokesman Mike Zampa said truck visit times vary widely, with some truckers reporting turn times as short as 38 minutes and others saying turn times are several hours.
Vessel calls in Seattle-Tacoma have returned to normal, and container backlogs on the terminals have dissipated. Port of Seattle spokesman Peter McGraw said occasional surges in exports result in truck bunching at the gates, however.
Terminal operators in Los Angeles-Long Beach are deploying huge quantities of labor on day, night and weekend shifts to reduce the congestion that is still present in the largest U.S. port complex. For example, the PMA reported that on Saturday 1,092 longshore jobs were ordered. The average for a Saturday is 970. On Monday, 1,547 longshore jobs were ordered for the first shift. The average dispatch for a Monday morning gate is 1,260.
The Marine Exchange of Southern California said eight container ships were at anchor on Tuesday. That was down from 10 vessels on Monday. As the vessel backlog in Southern California is reduced, container lines’ schedule integrity in the Pacific Southwest services will improve. The ships call in Oakland after leaving Los Angeles-Long Beach.
March 31, 2015
Port Delays Continue
Despite the February 21 settlement of a bitter labor dispute at West Coast ports between employers and members of the International Longshore and Warehouse Union (ILWU), whose members command average wages and benefits of about $1,200 a day, the continuing bottleneck is still causing job and revenue losses across many US industries.
Breitbart News had reported that the 13,500 ILWU members’ strategy of withholding of needed crane operators and slowing of crane movements cost shippers and their customers an estimated $1 billion a day during January and February.
The start of the year through early March traditionally is a slow time for international trade, but it tends to be a busy period for certain industries like agricultural exports and building material imports.
For California’s fresh fruit and vegetables producers, losses may never be recovered even after the settlement. Port delays are still running up to eight weeks, which means about 20 percent of this year’s agricultural exports are expected to spoil. Sun Pacific Shippers and Farming, the largest navel orange grower in California and largest kiwi grower in the United States, told the San Francisco Chronicle that port delays will cut their firm’s exports in half this year.
In addition, the bottlenecks at the West Coast ports that caused such horrendous losses pushed back building material imports by at least eight weeks, just as construction demand is accelerating in the spring ramp-up.
With the hot IPO market flooding Silicon Valley and the San Francisco Bay Area with oodles of cash, a number of large trophy office projects had been going-up in the South of Market tech zone. But much of that building has ground to a halt due to protracted delays blamed on the shortage of tempered exterior glass.
Nathan Rundel of the Build Group told CBS San Francisco: “We were all trying to get the cost of these projects less. And so we started to source Chinese curtain wall or overseas curtain wall.” He commented that the hoped-for savings have been more than wiped out by millions of dollars in delays.
Glass Shortage Impacting San Francisco’s Skyline
CBS San Francisco
According to Rundel, “curtain wall” that serves as the outside skin of most modern high-rises is always custom ordered for the each project. Without glass on the exterior, interior work on the structure cannot begin.
Rundel estimates that a delay could cost him $200,000 a month per building. Fortunately, he ordered glass from a very trusted supplier that took extra steps to get his materials delivered on time. He doesn’t have much sympathy for competitors that went for cheap imported curtain wall, “Their glass has been delayed five, six, seven months. Both from the fact that they went to new vendors and the fact that they can’t get their material.”
But Rundle has lots of sympathy for the construction workers that should be making big money in a record year of work. Due to the continuing bottleneck that is the hang-over from union battle at the ports, hundreds of hard-working laborers are being impoverished.
March 18, 2015
Brazil Crop Forecast Update
March 18 (Reuters) – An unprecedented drought reduced 2014 coffee production in Brazil, the world’s biggest grower, and stunted tree branch growth for the upcoming 2015/16 crop.
German coffee trader Neumann forecast in a March report that Brazil will harvest 45.3 million 60-kg bags of coffee in the harvest that will start in May, according to traders who saw the report.
This is up from its August forecast of 45 million bags. In the August report, it said Brazil’s 2014/15 crop was 47.7 million bags.
This is the lowest in a range of estimates gathered from trade houses since late December, with the highest at 49.5 million bags, estimated in February by Volcafe, the closely watched Swiss-based coffee division of commodities house ED&F Man.
Swiss-based trade house Ecom shaved its forecast slightly in a presentation to clients last week, estimating that Brazil would produce about 49 million 60-kg bags, with roughly 32 million arabica and 17 million robusta.
This was down slightly from its December estimate of 50 million bags.
March 10, 2015
Colombia coffee growers demand financial help as prices slide
– RTRS09-Mar-2015 16:53By Peter MurphyBOGOTA, March 9 (Reuters) – Colombia’s coffee growers are requesting government cash to help cover rising costs after a recent sharp fall in the price of arabica beans, a growers’ representative said on Monday, as discontent resurfaces across Colombia’s farm sector.The Dignidad Cafetera movement, which led protests by coffee growers in 2013, wants the government to pay out 850 billion pesos ($327 million) of subsidies not disbursed last year after arabica prices shot above an agreed subsidy cut-off rate.Coffee growers met with two congressmen on Monday to discuss their financial difficulties after a 17 percent slide in arabica prices and to demand left-over subsidy cash be channeled into a fund that would top up farmer incomes when prices fall low enough.“We are demanding that these 850 billion pesos are returned to create a stabilization fund to compensate for production costs,” said Alonso Suarez, Dignidad Cafetera spokesman for Antioquia, one of Colombia’s biggest coffee regions.Suarez said the movement would also seek a meeting with Agriculture Minister Aurelio Iragorri to discuss their demands and said a repeat of protests in 2013, in which farmers blocked roads and refused to sell beans, was a “last option.”Colombia is the world’s top producer of mild, washed arabicas.The government is unlikely to be as receptive to requests for funds as it was two years ago. Its coffers have been shrunken by last year’s plunge in oil prices last year that prompted a hasty tax reform to ensure it could still pay bills.The dip in international prices for coffee has been offset by a weaker peso, which has lost more than a fifth of its value versus the dollar in a year and hit its weakest level since 2006 on Monday. But that also raises the cost of imports like fertilizer.The farmer-funded National Coffee Growers’ Federation was not involved in Monday’s meeting, which included representatives from other agriculture sectors including cocoa, rice and plantain, who are also seeking government intervention.Arabica prices have plunged after fears subsided that world top coffee grower Brazil would face a shrunken, weather-hit crop for a second year in a row after rains recently ended a harsh dry spell and due to the weakening of the Brazilian currency.
February 27, 2015
Global Coffee Exports
27-Feb-2015 10:40 – WORLD COFFEE EXPORTS AT 8.79 MLN BAGS IN JANUARY 2015, UP FROM 8.77 MLN BAGS IN JANUARY 2014 -ICO
27-Feb-2015 10:40 – GLOBAL COFFEE EXPORTS DOWN 0.1 PCT IN FIRST FOUR MONTHS OF 2014/15 VS YEAR-AGO -ICO
27-Feb-2015 10:40 – GLOBAL ARABICA EXPORTS AT 68.44 MLN BAGS IN 12 MONTHS ENDING JANUARY VS 68.38 MLN BAGS PRIOR YEAR -ICO
27-Feb-2015 10:40 – GLOBAL ROBUSTA EXPORTS AT 43.56 MLN BAGS IN 12 MONTHS ENDING JANUARY, UP FROM 41.86 MLN BAGS YEAR AGO -ICO
Global coffee exports rise slightly in January -ICO – RTRS
NEW YORK, Feb 27 (Reuters) – Global coffee exports reached 8.79 million 60-kg bags in January, up slightly from last January, while exports for the first four months of 2014/15 were little changed from a year ago, International Coffee Organization data showed on Friday.
Exports of arabica coffee in the 12 months ending in January were up slightly at 68.44 million bags from 68.38 million bags in the same period a year ago. Robusta exports rose to 43.56 million bags from 41.86 million bags the prior year, the data showed.
February 23, 2015
PCCA Risk Management Seminar – Coffee Futures – April 8th – April 9th, 2015
Coffee Futures, Options and Structured Products
Risk Management Seminar
By: Albert Scalla Executive Vice President
Dates: April 8th – April 9th, 2015
Place: Sheraton Seattle Hotel
1400 Sixth Avenue
Seattle, WA 98101
PCCA Member $695 Non Member $975
Space is limited – So please register ASAP!
Training will be from 8:00 AM to 2:00 PM both days. Please click on the link below to register for this event.
February 19, 2015
Coffee Consumption Expected to Jump
The world is drinking more coffee, with demand likely to rise almost 25% in the next five years, according to the International Coffee Organization.
“Consumption is increasing as societies in India, China and Latin America continue to be westernized,” said Roberio Silva, the executive director of the intergovernmental coffee body.
Coffee demand is expected to jump to 175.8 million bags of beans by 2020, from 141.6 million bags now, Mr. Silva told the Africa Fine Coffee Conference in Nairobi last week. Each bag weighs about 132 pounds.
The strong demand projection comes at a time of squeezed global coffee supplies, which pushed prices to multiyear highs last year following a historic drought in Brazil, the world’s largest grower.
The forecast rise in demand comes as a drought in producer Brazil has pushed prices to multiyear highs. ENLARGE
The forecast rise in demand comes as a drought in producer Brazil has pushed prices to multiyear highs. PHOTO: BLOOMBERG NEWS
Total global coffee production is projected to drop to around 141 million bags during the current crop year, from 146.7 million bags last year, largely because of the effects of drought in Brazil and a plant fungus that is curbing output in Central America, Mr. Silva said.
“The world cannot afford to keep looking only at Brazil” for production, Mr. Silva said.
Weather worries this year have added uncertainty to Brazil’s harvest. Conab, the government crop agency, predicts coffee production at 44.1 million to 46.6 million bags of beans, on par with last year. The National Coffee Council, however, has said the harvest will be lower, at 40 million bags.
“Brazil is suffering from an additional drought, this time in its robusta-growing regions,” Mr. Silva said. Robusta is a variety of coffee that is more bitter and less expensive than arabica. Brazil grows both types of coffee.
Rainfall in the state of Espirito Santo, where much of the nation’s robusta is grown, is expected to remain low in the week ahead, according to Brazilian weather forecaster Somar Meteorologia. Marcos Antonio dos Santos, an agrometeorologist with Somar Meteorolgia, said more rains are expected in coffee-producing regions of São Paulo and Minas Gerais, where arabica is grown.
Coffee output from growers such as Vietnam, India and Indonesia won’t be enough to stabilize the markets next year, said Judith Ganes Chase, the head of U.S. commodity consultancy firm J. Ganes Consulting LLC. As a result, global coffee stocks may drop by four million bags in the year beginning Oct. 1, she said.
While tight coffee supplies ordinarily push prices higher, the market is also grappling with currency fluctuations.
“The plunging real has kept the market from advancing as one might expect from the ongoing problems in Brazil,” Ms. Chase said.
The Brazilian real has been trading at the lowest level in nearly a decade against the U.S. dollar. Brazilian producers and exporters tend to sell coffee when the real weakens because they get more reais back when they convert their dollar-denominated sales into their home currency.
On Friday, the May arabica coffee contract traded on the ICE Futures U.S. exchange eased 0.6% to $1.6650 a pound. Robusta futures traded in London rose 1.1% to $2,009 a metric ton, the equivalent of 91 cents a pound.
—Rogerio Jelmayer contributed to this article.
February 11, 2015
Colombia’s coffee sector needs complete overhaul -gov’t study – RTRS
By Peter Murphy
BOGOTA, Feb 10 (Reuters) – Colombia’s coffee sector needs a complete overhaul to recover from a huge loss of global market share, says a government-commissioned report seen by Reuters whose recommendations include deregulation of exports and the introduction of a minimum price.
Despite the undisputed quality of its mild arabica coffees, Colombia now supplies only a tenth of global exports versus 18 percent around 1990, prompting fierce debate over what steps one of the country’s largest employment providers should take to regain share.
The study, carried out over two years, recommends scrapping the minimum quality standard for exportable beans so growers can enter the fast-growing low-end coffee segment, where prices are higher abroad.
The report, to be delivered this week or next to President Juan Manuel Santos, was commissioned to address Colombia’s marginalization in global coffee.
Controversially, it advocates a smaller role for the National Coffee Growers’ Federation, which exports about a quarter of Colombia’s coffee, a suggestion that has drawn a fierce response from federation members when raised in the past.
The report suggests splitting the farmer-funded entity into a private trading arm and one that would provide technical support to growers. It argues growers may earn more by dealing with a more competitive, exclusively private, export sector.
Private exporters complain the federation, which publishes its fluctuating guaranteed purchase price daily to set a market floor, competes unfairly because it is tax-exempt and because its shipments face fewer bureaucratic hurdles.
The federation says its presence ensures growers receive a better price, while the study says it is a drain on government funds, which are used to supplement the $0.06 per lb the federation earns from a tax paid on coffee shipped by private exporters.
Growing Colombia’s prestigious high-altitude beans provides a livelihood for 350,000 families and provides important social cohesion in a country where a 50-year war with leftist guerrillas has been fought mostly in rural areas.
The federation has opposed tampering with the sector’s economic model, while private exporters say that lack of flexibility has led to Colombia’s decline, as the industry has not adapted to new trends in global coffee.
Instead of the federation’s price guarantee, the report recommends government-funded support for growers when prices drop low enough. This would emulate the mechanism used in the world’s top coffee grower, Brazil, to ensure growers’ variable costs are always met.
February 09, 2015
Truckers declare force majeure as West Coast port congestion continues
DRAYMEN SAY THEY COULD BE FORCED OUT OF BUSINESS BY HUGE DEMURRAGE AND DETENTION BILLS.
The Harbor Trucking Association (HTA), which represents drayage companies near the Ports of Los Angeles and Long Beach, said more than 70 trucking companies have declared “force majeure” in letters sent to the Intermodal Association of North America (IANA) and various steamship lines in response to huge “per diem” and demurrage charges for containers and chassis.
“These more than 70 companies have been unable to return or take possession of marine equipment due to the congestion crisis that has been impacting the Ports of Los Angeles and Long Beach for several months, and have each been charged hundreds of thousands of dollars in per diem and demurrage bills as a result. These unfair charges are in violation of California State Law under SB 45 and are on the brink of forcing many of our Licensed Motor Carriers (LMC) out of business,” the HTA said in a press release.
Congestion at West Coast ports has worsened as contract talks between the International Longshore and Warehouse Union and Pacific Maritime Association have dragged on for nine months. The PMA says the union has been engaged in a slowdown since Halloween. On Thursday, the PMA said a lockout at ports might occur if a contract is not reached soon, and the PMA suspended loading and unloading of ships this weekend, though some terminals may continue yard and gate operations.
“After three months of union slowdowns, it makes no sense to pay extra for less work,” said PMA spokesman Wade Gates, “especially if there is no end in sight to the union’s actions which needlessly brought West Coast ports to the brink of gridlock.” He said ILWU members make time and a half on weekends.
Gates said contract talks between the ILWU and PMA are scheduled to resume Monday.
Craig Merrilees, a spokesman for the ILWU, responded by saying “Closing the ports over the weekend is a crazy way to treat customers. The foreign-owned firms behind this move are insulting the businesses who need their containers, and should focus instead on reaching an agreement that is almost done – and could be finished if they focused more on concluding a contract and less on gimmicks and games that hurt the economy.”
On Saturday morning, Kip Louttit of the Marine Exchange of Southern California said 31 ships, including 20 containerships, eight bulk carriers, two tankers and a car carrier were anchored outside the Ports of Los Angeles and Long Beach because of congestion.
Weston LaBar, executive director of the HTA explained how the congestion crisis is affecting the drayage industry.
“A lot of our companies have six-figure bills, hundreds of thousands of dollars per month in per diem,” said LaBar. “And the biggest reason for the per diem is that they are not able to return marine equipment.”
Per diem is the charge paid when intermodal equipment is not returned by the end of the allowable free time to its origin or to another location, as previously agreed.
“The same goes for demurrage,” added LaBar. He said after containers are unloaded from ships, they are sometimes being placed in closed areas for their entire free time and truckers are “charged demurrage before they ever have the ability to take possession of the container and remove it. They are just in some area of the yard that the marine terminal for whatever reason has said ‘this area is not open.’”
Demurrage is a charge to be paid when intermodal equipment is stored on property, and is normally used to encourage swift removal of containers from terminals.
“For those companies who can no longer afford to pay these mounting invoices, they are being locked out from doing business at the ports causing further distress to the ongoing congestion crisis and hurting the individual truck drivers that drive for them,” HTA said.
“A lot of our smaller companies are on the brink of going out of business, because they don’t have the cash flow to support the per diem and demurrage charges” said LaBar.
LaBar said HTA members and other motor carriers have contested the charges, saying they should not have to pay them because carriers have not been able to pick-up or return equipment due to congestion at the port. He said in some cases charges have been waived, but in others, truckers have been told they must pay the charges or face being shut out of terminals.
HTA said the trucking companies are invoking a declaration of force majeure as defined under the Uniform Intermodal Interchange Agreement (UIIA), the standard agreement used. The UIIA provides this definition in the agreement, “Force Majeure: In the event the motor carrier is unable to interchange equipment to provider within the free time as specified in provider’s addendum, or provider’s applicable tariff, as a result of acts of God, war, insurrections, strikes, fire, flood or any like causes beyond the motor carrier’s control, the motor carrier shall be exempted from the per diem charges to the extent of, and for the duration of, the condition that prevented the redelivery of the equipment.”
LaBar said, “The steamship lines seem to think that they can declare force majeure under the addenda they file, but they don’t think the truck driver has the ability to do that and the first thing we need is for the industry to realize that this is absolutely a state of force majeure.”
Although the Pacific Maritime Association issued a press release on Nov. 6 headlined “Longshore Union’s Job Actions Spread from Pacific Northwest to Nation’s Largest Port Complex in Southern California,” LaBar said the HTA believes a slowdown began in the port in mid to late summer of last year.
“The HTA stands by this ground breaking declaration from these companies and will continue to fight for members to continue moving the world’s cargo,” the association said. “Many of our members have taken to the Dispute Resolution Process (DRP) under the UIIA to have these unfair charges properly dismissed.
“We don’t think that is enough!” HTA added. “The motor carrier does not have equal rights under the UIIA” as other stakeholders.
HTA is calling on the IANA to hold a summit to amend the UIIA and add a “Motor Carrier Bill of Rights.”
“It is high time the LMC had an equal seat at the table, as well as equal and fair protections under this one-sided agreement,” said HTA. “We are advocating for a true bi-lateral agreement that allows our members to have the necessary protections to prevent abuses like these from happening again and harming the global supply chain and goods movement in Southern California.”
LaBar said truckers would like, for example, more ability to set their own rates and have marine terminals involved in the agreement. This way, if a terminal will not take back an empty container, the trucker would be able to charge for storage or diversion of equipment.
This would “even the playing field,” he contended.
“The marine terminal which controls a lot of these situations are not part of the agreement,” he said. “It is the ocean carrier, the equipment provider, motor carrier and we feel the marine terminal needs to be part of that.”
Truckers pay per diem charges to ocean carriers if containers are returned after a free time period expires that can range from $85 to $175 on a dry containers, and reefer charges can be double that, according to LaBar. He also noted that truckers may have to pay a separate per diem to the chassis leasing company.
IANA administers the UIIA, which has over 6,700 motor carrier, 53 equipment provider signatories and is utilized for approximately 95 percent of all North American intermodal equipment interchanges.
January 15, 2015
Detailed Brazil Weather/Rain Forecast
… in case of interest ….
· The forecast lower rainfall values are roughly concentrated in the Sul de Minas/Mogiana regions while higher forecast values are suggested for more southern regions (eg border areas of Sao Paulo and Parana states).
January to March period, 2015.
Seasonal forecast for January to March, 2015 using our internal USQ system:
· most locations in the key Sul de Minas/Mogiana regions have a probability of getting their long-term median rainfall of between 26% and 29% for this period.
· Most other locations in southern Brazil (especially in the far south) have an approx. 50% probability of getting their long-term median rainfall for this period.
Seasonal forecast for January to March, 2015 using the general circulation models of our collaborators of the UK and other sources: double the risk of being in the lowest 33% of possible values for the Sul de Minas/Mogiana regions. Close to normal probability values for remaining regions.
February to April, 2015.
Seasonal forecast for February to April, 2015 using our internal USQ system:
· most locations in the Sul de Minas/Mogiana region have a probability of getting their long-term median rainfall of between 30% and 36% for this period.
· Most other locations in southern Brazil (especially in the far south) have an approx. 50% probability of getting their long-term median rainfall for this period.
Seasonal forecast for the February to April total period: using the general circulation models of our collaborators in the UK and other sources: double to three times the risk of being in the lowest 33% of possible values for the Sul de Minas/Mogiana region. Close to normal probability values for remaining regions.
14/1-22/1/15: 25%-50% of normal rainfall (ie 15-30mm) in Sao Paulo and Minas Gerais States – close to normal values remaining regions (ie more southern regions) (ie 50-70mm).
22/1-30/1: 10-35mm throughout.
Temperatures for the January to March period: 50%-70% probability of above normal mean temperatures, especially in Sul de Minas/Mogiana.