Tanzania is Back! by Joe Borg

by Joe Borg, Trader

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Tanzania is an interesting origin for us for a few reasons but one stands out among the rest; we love peaberries! If you’re not familiar, a peaberry is a natural genetic mutation of the coffee seed inside the fruit that causes the development of a single, small, oval-shaped bean rather than two beans that are flattened and facing each other evenly.  You can find peaberries throughout the coffee growing world, but Tanzanian peaberries stand out as one of the more commercially marketable and viable available.

Tanzania has been a challenging origin over the last few years. With ever-changing government regulations, mismanagement, and lack of investment, we’ve unfortunately seen a decline of quality. This, in turn, led for our need to expand our presence in the country to build better and more sustainable relationships with producers, millers and exporters in the area.

So with all this in mind, Richard and I traveled to Tanzania in October of 2018 to expand our horizons and source some new high-quality coffees from great new partners. The end result has so far been an incredible success. We’ve seen some of these coffees from our trip land in our warehouses, and will see more arriving through February and March.


Tanzania APK (Africa Plantation Kilimanjaro) Lyamungo Estate

Located in the shadow of Mount Kilimanjaro, Lyamungo is one of four farms that make up the Africa Plantation Kilimanjaro estate. The estate is owned by Alejandro Galante, a coffee farmer from Antioquia, Colombia, with each farm managed individually. 95% of APK’s production is washed, though recent experimentation has led to more honey and natural processing occuring. Drying is done on raised beds, where APK employees carefully monitor the moisture level of each lot to ensure even drying.

Cupping notes (AA):

Notes of meyer lemon, brown sugar, red apple, and tangerine

Cupping notes (Peaberry):

Notes of green grape, red apple, and white sugar


Tanzania Mbosho Estate

The Mbosho Estate is named for the village in which it’s located, just south of the famous Mount Kilimanjaro. Mbosho is managed by James Powell, a coffee industry veteran who gained experience owning a farm in Zimbabwe. He leases Mbosho’s land from the local society and oversees the production and processing of 40 hectares of coffee trees. This lot is washed using large tubs instead of the traditional channels; the estate doesn’t have space for large-scale channels often seen at other farms. Once washed, coffee is dried on raised beds and monitored constantly until it reached the appropriate level of moisture.

Cupping notes (PB):

Notes of dark chocolate, peach, and meyer lemon


Tanzania Kuza Tudley Estate

The Tudley Estate is located in northeastern Tanzania near the base of Mount Kilimanjaro. Made up of mostly SL28 tree varietals, the Estate also produces Bourbon and Kent varietals, as well as a small crop of avocados and macadamia nuts. Coffee here is picked, then depulped and washed the next day. Drying is done on raised beds, with Estate staff carefully turning the coffee throughout the day. Drying takes between 10 and 15 days depending on the weather. Tudley is a large estate with over 180 permanent workers picking and processing more than 60 tons of coffee each year.

Cupping notes (PB):

Notes of lime, honey, and clementine


Tanzania KPL (Kilimanjaro Plantation)

The Kilimanjaro Plantation (KPL) was started in 200 in the shadow of Mount Kilimanjaro. Five years and almost a million new trees later, the plantation was up and operational. An interconnected drip-line irrigation system feeds each of the plantation’s trees, ensuring an equal and controllable water flow. This irrigation system boosts the natural ecological conditions caused by the proximity to Kilimanjaro and provides an excellent environment for growing coffee.

KPL’s centralized wet mill replaced eight decentralized processing plants and allows for consistent high-quality preparation while reducing wastewater generated by the operation. The plantation staff takes ecological concerns seriously and has set standards that meet UTZ guidelines, as well as a consistent and comprehensive review policy.

Cupping notes (AA):

Creamy, with notes of red apple, tangerine, sweet grapefruit

Kenya Arrivals: Muiri Estate, Kaliluni and Nzaini Cooperatives by Education RoyalNY

Three brand-new offerings have arrived at Royal New York from Kenya. All three are awesome examples of the classic Kenyan washed coffee; bright, tangy, a little sweet, and definitely worth a look. Supplies are limited, so be sure to contact your trader to check in about bag quantity and pricing!


Organic Kenya Muiri Estate

The Muiri Estate was founded in the late 1970’s, and is named for a local tree species in the Kikuyu language. Muiri is a large estate, with an on-site wet mill for processing, a dam, storehouses, and cottages for its workers. Muiri has about 156,000 trees in production, and is actively experimenting with other varietals and crops as well.

This coffee is a blend of SL28, SL34, K7, and Ruiru 11. The coffee is washed, then dried on raised beds on-site. Cupping notes are defined by lemon rind, sweet tea, and plum.


Kenya AB Kaliluni

The Kaliluni Cooperative Society is located just east of Nairobi in Machakos county and is made up of just over 1,400 members. Each of these members delivers their coffee immediately after harvest to a centralized wet mill that handles the processing for the entire society. Harvesting is very selective, and the wet mill in Kaliluni turns out about 151 metric tons of high-quality green coffee each year.

This lot is made up of the SL28 and SL34 varietals, and is grown between 1,450 and 1,800 meters above sea level. Coffee is washed, then sun-dried on raised beds. The resulting cup profile is bright but sweet, with notes of raspberry, sweet lemon, white sugar, and apricot.


Kenya AA Nzaini Co-op Society

Based in Machakos county in southern Kenya, the Nzaini Cooperative Society is made up of about 546 members. The Society has a centralized wet mill in Nzaini where members deliver their harvested cherry daily for processing. Nzaini is part of a larger cooperative group known as Kikima, which is made up of more than 3,200 producers.

This coffee is grown at around 1,400-1,800 meters above sea level and is made up of SL28 and SL34 varietals. Its has a classically bright washed Kenyan cup profile; with notes of grapefruit and hibiscus, rounded out with pear and raspberry sweetness. Look for excellent green coffee prep, a result of careful harvesting and sorting.

Market Watch: January 2019 by Fred Schoenhut

Technical Analysis of the New York Futures Market

The chart above of course is not much different from our October report, but the differences we can take into consideration give signals for us to factor into our current quarterly report and analysis.

  • The market had a reversal month in September 2018, which was followed by a 30 cent per pound “correction” which concluded near the seven-year downtrend line.

  • As we write, we can report that, for now, the market held the September lows and may be “coiling” in advance of another short covering rally.

  • The year on year Open Interest analysis is much larger (57,000 contracts), which indicates the added “short interest” in the market.

  • The global coffee market has had another three full months to interpret supply and demand projections for the upcoming year. In other words, the downtrend we see is more mature and the interest for producers and/or speculators to hedge or add to existing short positions here at historical lows (near and under $1.00 per pound) is waning.

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While the overall long-term trend is lower, one can see on the weekly chart that several downtrend lines have been broken and since the September reversal (with the short cover rally to $1.25), we have yet made a second reversal and can identify a Minor Support Line – which is minor in that it has just been formed. If the market holds these levels, and could break the current downtrend line (at about $1.20), the minor support would then become more significant. If the market could break the last weekly continuation chart high of $1.2550, we would then classify the coffee market as being out of a downtrend and would then be classified as a neutral-trend market.

The daily chart visibly shows us, as the monthly chart does, that the market does not seem to stay at or near $1.00 per pound for very long.  We will once again review the points made in our last quarterly report and report the similarities we can make today:

Consider these few factors;

  • Commitment of Traders had shown the funds and specs short position at record levels of short positions (roughly 105,000 lots).  This amount of short position amounts to roughly 26 million bags of coffee for New York “C” alone.  When combined with London, most had expected the number of shorts to have exceeded 35 million bags of coffee.  Taking into consideration that position against any surplus in coffee supply, a conclusion could be drawn that the sheer size of such a speculative position would not have been sustainable.  For January 2019, we would say that although the open interest and short sided spec position are not of the magnitude we saw in October 2018, the relative factors of this position being hard to sustain still exist.  Add that the “most recent short position” had not been reestablished until the market failed $1.20 or $1.15, the house money is much different from last go-around where short positions were very mature and likely established well above $1.50.

  • Additionally, for some origins (Brazil, robustas, others) we are above cost of production.  However, for some source countries, particularly the better mild coffee producers, we were and still remain below COP.  We would maintain this train of thought and have seen publications that would validate this conclusion. 


Macroeconomic Factors

The Brazilian Real is very influential to coffee prices.  Recently, the Real has broken through the 200 DMA to the upside and we may now see a continuation of better prices for the Brazilian currency that we have seen since the end of August. 


Source Country Commentary

Brazil

Differentials have remained steady to firm over the past quarter due to the lack of interest from sellers at origin.  With Brazil being the largest producer of coffee with the lowest cost of production, cash flow at the farm level allows producers to hold coffee until the time when it’s most advantageous for them to sell.  The only way differentials could ease during the remainder of this crop would be a significant rally in the “C” market.  From the availability perspective, the port congestion has experienced relief and the outbound flow of coffee has improved significantly over the last 30 days.   

Colombia

Differentials for Colombian coffee remain stable to firm.  Export registrations are marginally higher than last year.  The mitaca crop seems to be in good shape, although due to lower net prices to farmers, fertilization (or lack of) is a factor.  Producers/exporters having been willing sellers of new crop coffee in the September/October futures market rally, now are reluctant to follow prices much beyond $1.1000.  

Centrals

Honduras:  New crop has been off to a very slow start with 6% of the harvest being exported when normally by this time we would see 15%. Due to the crop being late by almost a month, internal prices for coffee have risen making nearby differentials rise.  Compared to last crop, differentials increased due to a combination of the consistently low “C” market and the delayed crop.  With a slight uptick in futures pricing and overall production expected to be approximately 650,000 greater than last year, Honduras is expected to be a more aggressive seller in the coming months compared to other centrals.  

Costa Rica:  is set to have one if not the lowest yields in the past 10+ years. Icafé, Instituto del Café de Costa Rica who is a public company aimed at promoting Costa Rican coffee, education and the support of production, processing, export and marketing has estimated that the entire countries production could be close to 1.83 million exportable 46 kilo bags. The West Valley accounts for most of the shortage in yields.  The reasoning behind this thought is due to the strong winds and long rains of 2018 as well as an off cycle year which has caused severe tightness in the market.  Not many suppliers are offering more coffee for new crop until yields come in with more volume at the mill. Price offers have been firm for most of the season hoping to sell at fixed prices rather than “to-be-fixed,” due to the lower New York “C”.

Guatemala:  Looking for a similar harvest for this year… approximately three million 60 kilo bags.  Roya is still a concern as the harvest has been under way for a few weeks now with some HB and SHB coffees beginning to ship.  Guatemalan producers and suppliers are also looking to sell at fixed prices with concern of the low New York “C”.  Not many are willing to look at selling their coffees on a differential basis.  So far quality seems very good and we expect that to stay consistent.

Africa

Ethiopia:  The rain in October that continued in to early November helped ripen the cherries.  In some areas picking started in November.  Early reports from our suppliers indicate that we will have quality which will be on par with years prior if not better.  There is the possibility the earlier arrivals will compare nicely to last year due to earlier ripening of cherries and processing underway at origin.  We will soon receive pre-shipment and offering samples from Yirgacheffe, Sidamo and also from the Gera Estate in Djimma.

Kenya:  Late crop or main crop is well under way as the auction is seeing large volumes of coffees being presented from low quality naturals to high quality cooperative and estate coffees.  Production seems to be on par with last year and prices too seem to be firm looking for the highest price at the auction for high-cupping lots.  We have just seen our first delivery of cooperative and factory traceable lots as well as a great cupping Organic lot from the late crop.  More coffees will start to hit our cupping table as the weeks go on.

Tanzania:  Is slowly arriving in the U.S where northern estate lots have been the gems of the season. Over the past few seasons we have seen inconsistency mainly from the southern areas, which seems to be a continued trend overall as well for this year.  The port of Dar es Salaam is jammed with coffees from neighboring countries looking to ship their coffees (Burundi, Rwanda, Uganda) and we can expect some delays yet again from this port. This year will be a bit different from prior years where our focus has been more heavily concentrated on traceable, better processed lots from the north near Kilimanjaro and Arusha.  Watch for further developments as coffees are starting to arrive from February to April.

Far East and Indonesia

This region can sure use a break from its share of natural disasters.  As the Sumatra harvest and exports have started to roll in, we have witnessed fractional relief in the internal market price all while the “C” market continues to trend lower.  Papua New Guinea, Timor, Java, Sulawesi and Bali have all but wrapped up their exports and with the underpinning of the Sumatra so it is our suggestion to insure you have proper coverage into the next six to nine months.

Once again, we reiterate that with the recent lows in the futures markets, our focus here at Royal is aligning ourselves with good supplier-partners who will do their best to maintain quality given the change in prices year on year.


Demand

Roaster interest to extend fixations had diminished during the rally we saw from mid-September to end October.  However, the roaster has shown good interest once again as prices dipped through $1.055 and $1.00 on the C futures market.  Buyers are now extending price protection beyond six months coverage.  


This outline is intended to promote thought and an exchange of ideas.  If you have an interest to share your point of view, please do not hesitate to call your sales rep here at Royal, or you could call me.

Happy New Year and Good Luck Trading!

                Fred Schoenhut

                Royal Coffee New York, Inc.

                (908) 756-6400

Our Favorite Coffees for the New Year by Dan Loughrey

2019 is off to an excellent start at Royal New York! Check our some of our traders’ current favorite coffees below.


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Organic Peru COOPAFSI “Las Damas de San Ignacio” Fair Trade

Brittany Amell, Trader

This offering from Peru comes from a group of 100 women who joined together to create the program called “Las Damas de San Ignacio”, also known as “the Ladies from San Ignacio”. This coffee is my favorite because it’s approachable, sweet, bright and memorable. You can roast it multiple ways to bring out different levels of sweetness, chocolate, and acidity. It’s a great single origin that can be highlighted as drip, espresso or cold brew (as a nitro cold brew it tastes like a yoohoo!). You can’t go wrong with this one, I highly recommend it to anyone looking to bring in a comforting coffee during the harsh winter months.


Colombia Huila Excelso “La Troja” Estate

Camilo Yubank, Trader

Huila is well known in the specialty market for producing some of the best-washed coffees in the world and this delivery from Alcides Sanchez’s La Troja Estate is a perfect example. The notes of peach and green apple contrast with the smooth milk chocolate aftertaste deliver a balanced, complex and interesting cup that will have your customers asking for more.


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Rwanda Misozi Abakundakawa Peaberry - Fair Trade

Andrew Blyth, Trader

Great coffee at a great price! Traditional washed East African profile with notes of sweet tea, ripe peach and honey at a roast level on the lighter side of Medium. Peaberrys from Rwanda are viewed as a byproduct unlike it’s Tanzanian neighbor making this coffee a great values for the cup score.


Colombia Aponte Nariño - Royal Reserva Honey

Chris Schoenhut, Trader

My favorite right now is the Colombia Aponte Nariño-Royal Reserva Honey(GP)This one jumped off the cupping table for me.  I really appreciated the sweetness and balanced acidity this honey processed coffee had. Cupping notes of red apple, cherry, white sugar, and strawberry jam. Plenty of bags in store!


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Burundi A Sogestal Kirimiro - Teka Washing Station

Dan Loughrey, Marketing & Education

This is a new one for us, but the folks at the Teka washing station absolutely delivered on this coffee. Careful attention to processing and drying gives this coffee a super clean final cup with notes of red grapefruit, peach, and sweet tea. It’s sweet, but there’s a really pleasant tart flavor present too. Definitely something to consider for a Chemex or other pour over.


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Papua New Guinea Tsekaka Peaberry

Joe Borg, Trader

Papua New Guinea is an origin that has consistently been a favorite of mine throughout the years mainly due to the complexity in the cup and storytelling ability for the coffees that we have been fortunate to source. In Papua New Guinea a majority of the coffees are washed (compared to some of the neighboring islands) which can produce a much sweeter and cleaner cup profile. This year, we were able to work with a tribal group called Tsekaka that owns and operates a plantation called Amuliba in the Jiwaka Province in the north east of PNG. They were able to sort a full container of peaberries for us that are very clean and cup with sweet fruit notes of cherry and cantaloupe.

Now Arriving: Burundi by Education RoyalNY

This year’s crop from Burundi is arriving just in time to put an excellent end to 2018. We’ve got three lots of coffee that we’re particularly excited about, each profiled below. These coffees hit all the right notes you’d want from high-altitude washed African coffees, with sweet citrus notes abounding.

These coffees won’t last long, so be sure to check in about them sooner rather than later!


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Burundi A Kayanza Matraco - Businde Washing Station

Notes of lime, nectarine, black tea, and white sugar

This coffee is produced by the Matsitsi Trading Coffee company, also known as Matraco. Its owner, Mr. Matsitsi, is a coffee producer in charge of the company’s three washing stations and more than 10,000 trees. Two of these washing stations are located in the north-central Kayanza province and another is under construction in the Muyinga province. Matraco has an excellent reputation for turning out high-quality coffees, winning Cup of Excellence awards in 2013, 2014, 2015, and 2017.


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Burundi A Ngozi - Rimiro Washing Station

Notes of grapefruit, rhubarb, and peach

Also from the north-central region of Burundi, this lot comes to us from the Ruhororo Commune in the Ngozi province. The washing station, Rimiro, manages the processing for over 1,700 farmers in the region with a combined total 500,000 coffee tress under production. Coffee is milled at the Budeca dry mill before being bagged and exported.


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Burundi A Sogestal Kirimiro - Teka Washing Station

Notes of sweet tea, red grapefruit, peach, and tangerine

Though the Kirimiro region of Burundi produces a lot of coffee, this lot comes specifically from producers with very new plantations. It’s processed at the Teka washing station, which is well-known in the area for processing Cup of Excellence winners. The washing station produces about 950 tons of green coffee each year, and has storage capacity for 80 tons of parchment at a time.