The end of the year is drawing to a close and from all of us here at Bennetts we would like to thank you for all the support you have shown us over the past 12 months. In 2020 we asked all of you to ensure and maintain open communication with us, as it would be the key to getting through the challenges in front of us… and boy have there been some challenges this year. But without two-way communication, we might have been in a different place by now – so again, thank you for working with us – and we hope to continue to grow our trading relationships in the new year.

Unfortunately, the worst is not yet behind us, the strain of Covid restrictions and unprecedented weather events globally are still being felt, and further exacerbated by the shipping crisis. You can read more about the origins below.

MARKET REPORT

So, there you have it folks. The price of Arabica coffee peaked at just shy of 250 US cents/lb, the highest since October 2011.
There were many factors playing roles of differing degrees of importance in this latest spike (supply / demand / logistics / etc), but ultimately it all came down to the fact that the trade as a whole was caught in what is known as a ‘Short Squeeze’ as the December Futures contract reached its maturity, meaning they had to close out those positions. This means that a large segment of the commercial sector (exporters and roasters, mainly), had up until then sold coffee futures based on the market being at much lower levels over the preceding months (years, even).



In order to close out a ‘sold’ position, you need to do the opposite action, which is to ‘buy’ it back. And when there are frosts, droughts and logistical swamps to traverse between the Sell and Buy actions, then the pain can get very real…. Even more so when speculators on the other side of the trade smell blood and really start turning the screws (hence the ‘Squeeze’ factor). In this case, the shorts waited and waited for the market to turn around, but ultimately it was to no avail…

This is a very simplistic way to put it, I know, but hopefully it illustrates the perils of not getting out of a bad situation in time and cutting your losses.
Whether or not this will be the highest this market goes to during the current rally is beside the point (although we do hope it is the case). The take-home message is that high prices are here to stay for the time being as the trade is generally short and only covering nearby shipments in the hopes of price relief further afield. This in turn place additional pressure and price premiums on spot purchases ex-origin.

The logistical issues are also here to stay for quite some time. Purchasing decisions made today all the way over here in Australia for coffees from most origins (bar a few) won’t appear in our antipodean warehouses for 4 to 5 months, so if you need stock in April/May, you kind of need to make a decision today, independently of the price… otherwise you could be roasting a lot of fresh air.

ORIGIN UPDATES

India
Shipping and container availability at origin is now becoming an unbelievable issue. Freight rates and transit sailing times have blown out and there is still no end in sight. Recently we have seen shipment bookings push out 2 to 3 months and only to be worsened by containers getting stuck in transit ports before they get their second leg to Australia.  Historically, shipment booking and arrival times from India to Melbourne would average 60 days, now we are working on a time line closer to 180 days.
 
Brazil
Most of our suppliers are advising that the availability of food grade containers has now become very difficult in Brazil and they anticipate this will continue for many months. Freight rates are pushing higher than we have seen in our trading history with many suppliers indicating they will be higher again in the new year.
 
Colombia
Many of our shippers are advising that the availability of food grade containers is now a major issue in Colombia. This is being heightened by the fact that the Colombian economy has slowed dramatically and the inbound flow of goods in food grade containers has dropped severely. Major ports across the country are still seeing operational issues and logistics are somewhat unpredictable. Vessels are simply bypassing Colombian ports all together and this is creating huge pressure on shippers and port warehouses. The logistical issues here mirroring the same problems to that of June/July this year.  Sailing transit times have increased and are now some 30 days longer than just two months ago, and like most origins, freight rates are on the rise.

Colombia is due to have it General Election in late May 2022. Many of our origin industry participants are forecasting further disruptions to shipments over this period. Some have even foreshadowed a total lock down like we saw in March-May 2021.
 
Africa
Nearly all origin shippers on the East Coast of Africa have flagged the issue of the short availability of food grade containers. Booking vessel space has also become very difficult, with many services initially booking vessels, only to find they have no empty container to use for the cargo at the time of the booking. Shipment transit times are also increasing with some voyages now well over the 75 days; 30 days more than we were seeing up to June this year. And again, freight rates are increasing.

Current civil unrest in Ethiopia has raised concerns as the Ethiopian coffee harvest season has just started and shippers are expecting some disruption going forward.
 
Central America
We have seen small delays in shipments from our origin partners over the past few months, but again shipment transit times have increased quite markedly.
Voyage times from Costa Rica, Honduras, Guatemala and Peru have all pushed out drastically. Some of the origins have nearly doubled (up to 120 days) the amount of time spent on the water compared to just three months ago. We are seeing the highest increase in freight rates from these origins. With the Central American coffee season starting last month, we can only see more issues arising as we enter into the new crop high volumes shipment season in the new year.
 
PNG and Indonesia
Shipping out of Indonesia has been slightly slower, but not impossible. Container shortages are an issue here and of course the dreaded freight rate increase is affecting all cargo. PNG shipping times are holding steady, with their main challenge being the dwindling supply of food grade containers for export.

The PNG General Election is to be held in Mid June 2022 which coincided with the peak of the coffee harvest season. History clearly shows that for six weeks leading up to an Election and six weeks after the Election PNG supply is somewhat unpredictable and unreliable. In light of current Covid outbreaks and protests, PNG may become tumultuous over the coming months, and we will be keeping up communications with our supply partners regularly.

Canada
What do we ship from Canada you might ask? Only the most famous Coffee without Caffeine! Unfortunately, however our good friends at Swiss Water Process are experiencing major shipping issues, with freighters not docking in Vancouver to both deliver the coffee for decaffeinating and exporting the finished good out. While we currently have shortages of SWP Decaff in Australia, rest assured we are working around the clock to secure more of this amazing coffee as quick as we can.
 

A WORD FROM THE CUPPING ROOM

For those of you not in the roasting game, we have just landed this seasons Indian Assam and Darjeeling teas, as well as our extensive range of Sri Lankan Ceylon black teas. Still to come this month are green and black China teas. Please contact your account manager for price and availability.

On the coffee front, last week was a big one, with the landing of our Nicaraguan specialty lots from La Bastilla Estate – including Yeas processed, Natural and Washed microlots with fancy names like Blueberry and Pineapple Candy. They took a scenic route to get here (thanks to international port congestions) but are all cupping amazingly!!

We also received this year’s specialty production from our friends at Kelagur Heights Estate in India. Known for their varietal hybridisation and experimental processing techniques, Kelagur Heights has delivered us some great Natural and Pulp Sundried Honey lots from their HDT X Geisha, SLN795, SLN6, SLN7 and Robusta crops.

We don’t anticipate these coffees hanging around long, so get in quick before Christmas.  

 

Photo: Honey process at Kelagur Heights Estate

CHRISTMAS CLOSURES
 

As we rapidly approach the Christmas and New Year period for this calendar year, we would like to advise you of the last trading day for your order to be despatched and delivered to you prior to Christmas.
Please note the following points:

ORDERS DESPATCHED -

QLD, WA, TAS & NT:

• Last day of despatch: Friday 10^th December 2021.  
• Order must be received by no later than 12.30pm on Thursday 9^th December 2021.

NSW, ACT, SA & Regional VIC:

• Last day of despatch: Wednesday 15^th December 2021.
• Order must be received by no later than 12.30pm on Thursday 14 ^the December 2021.

 
Melbourne Metro:

• Last week of despatch commencing Monday 20^th December 2021.
• Order must be received by no later than 12.30pm on the previous business day of this week. The actual delivery day will be subject to the geographical location of the delivery.

OFFICE & WAREHOUSE CLOSURES -