Hurricanes in Honduras Hammer Coffee Crop
Honduras, Central America’s coffee king, just got walloped.
Back-to-back Category 4 hurricanes nailed the country’s coffee hub within two weeks of each other in November. The storms, named Eta and Iota, dumped a collective 49 inches of rain that led to intense flooding and landslides.
The destruction pounded 14 of Honduras’ 15 coffee-producing provinces, damaging roads and bridges that blocked workers’ access to fields. 60% of the country’s production was in the storm’s path with a wide swath being the premium arabica beans.
When it rains, it pours: The storms layered on another debacle to an already tumultuous growing season. While the ‘grid’ of access roads were affected, the rain actually spurred coffee bean maturation in a time when labor to harvest will be tight. COVID-19 has shrunk worker pools creating a squeeze on production and export abilities.
Markets have noticed: Between the Central America storms and Brazil’s wicked dry growing season, supply concerns are real. Arabica-coffee futures spiked 18% in November.
And it’s no wonder.
Iota’s destructive path across Honduras, Nicaragua, and Guatemala touched 12% of global arabica production. Brazil’s output is 4x that.
Starbucks supply chain leaders might be holding their breath.
Where it stands: Work to repair access to coffee regions is already underway, but losses are already estimated to be in the 10% range with limited visibility to the actual crop. The next thirty days will be make or break for producers and a good indicator of where coffee prices are headed in 2021.