Colombian Earthquake Damages Road Essential for Transporting 60% of the Country's Coffee Exports – CoffeeTalk

Colombia has recently faced a significant 7.4 magnitude earthquake that has severely impacted the country’s coffee production and export infrastructure, particularly affecting a road that is essential for the transport of roughly 60% of the nation’s coffee exports. The earthquake’s epicenter was near the coffee-growing regions, which are pivotal for Colombia, the world’s third-largest coffee producer and a key supplier of high-quality mild-washed Arabica beans crucial for major brands like Starbucks.

According to Oliver Broster, a senior manager for coffee analysis at Expana, the extent of the damage is still being evaluated, but the National Federation of Coffee Growers has reported interruptions at the Pacific port of Buenaventura, the main transit point for coffee exports. Operations at the port were temporarily halted for inspections, while landslides have obstructed access to the region. Exports are reportedly continuing through the Caribbean, but the extent of disruption to road networks, mills, and other critical infrastructures remains unclear.

The market has reacted strongly, with Arabica futures experiencing a surge of about 30% since early June, driven by fears of El Niño, which typically results in adverse weather conditions affecting coffee-growing areas. On Tuesday, futures peaked at $3.26 per pound before correcting as traders reconsidered the earthquake’s potential implications on Colombian coffee supplies. Agricultural commodities expert Kona Haque emphasized the precariousness of global Arabica inventories, particularly as Colombia is a significant source of mild washed coffees; any supply disruptions are likely to be met with market sensitivity.

Moreover, coffee producers are already bracing for a robust El Niño phenomenon, which poses risks of substantial temperature and rainfall shifts in coffee-growing regions worldwide and is a contributing factor to recent price volatility. Germán Bahamón, the head of Colombia’s coffee federation, has mentioned that while a brief, moderate El Niño could foster production, a prolonged and severe event could inflict considerable damage on coffee crops not just in Colombia, but also in Brazil and Vietnam, hence seriously undermining global supply chains.

Colombia’s coffee production is anticipated to decline this year, with estimates at about 12.8 million 60kg bags, a notable drop from the previous year’s 14.8 million bags, which marked the largest harvest in 33 years. This downward trend underscores the nation’s strategic approach to prioritize quality over quantity, leveraging its high-altitude regions for the production of speciality Arabica coffee amidst these challenges.

Read More @ FT