Guatemala City, Aug. 4 - Guatemalan coffee growers are enjoying unprecedented interest in their beans ahead of the 2009/10 harvest as buyers look to fill the gap in quality coffee created by a shortage of the crop in Colombia.
Growers hope to cash in as production in Guatemala is expected to increase 2.7 percent year-on-year to 3.85 million 60-kg bags in 2009/10 after better climatic conditions have resulted in promising flowering.
Guatemala's high quality coffee commands a premium above prices paid for regular beans in the New York commodities market, known as the C contract.
A shortage in high-quality coffee from Colombia due to poor weather and a tree replacement program meant prices spiked in 2008/09. Replacements for Colombian mild arabicas can be found in Central America and Peru, known for specialty beans.
"The phenomenon that happened last year, nobody was expecting it but now the roasters are already very eagerly looking to buy ahead of time to cover themselves and not wait until the last minute," Christian Rasch, head of Guatemala's coffee producers association Anacafe, told Reuters.
"There's more interest (in buying) than there has been in any other year at this stage of the cycle," Rasch said.
Roasters say Guatemala's neighbors like Nicaragua, Honduras, Costa Rica, and El Salvador are also being eyed.
"I would just count Guatemala among many Central American coffee-producing countries that have seen some renewed interest as a result of the Colombian situation," said Lindsey Bolger, a buyer at Green Mountain Coffee in Vermont.
HIGH PRICES
In part due to the shortage, the premium paid for Guatemalan coffee recently reached nearly $60 per 60-kg bag above the C contract, Rasch said in an interview
Many Guatemalan farmers complained they missed out on a windfall last year since they had already sold most of their crops by the time the Colombian shortage became apparent and prices climbed.
Looking forward to future premiums, Guatemalan farmers are encouraged by the maturing crop.
"All our plants are producing this year and they are loaded with flowers," said Rafael Coronados, a coffee farmer from Guatemala's western lowland department of Suchitepequez.
Rasch said prices are unlikely to reach the same heights in the 2009/10 season but will be consistently high, with the differential paid for Guatemalan quality beans in the range of around $20-$40 per 60-kg bag.
Colombia, meanwhile, has had improved weather conditions and its tree renewal program is starting to bear fruit, so it could see a rebound in production this season, which would lower prices, commodities analyst Judith Ganes said.
But she added that more supply problems could be seen in Brazil.
"I would turn attention away from the problems that Colombia faced this year and be concerned a little bit about Brazil because Brazil has had now their own share of too much precipitation," she said.
"If Brazil has a quality issue with some of their crop there would be less Brazilians to take away from the Centrals and so that would then help sales for Guatemala and other countries," Ganes said.