Last week we made the comment that volumes for sale at ECX were disappointing; below we the compare New Crop arrivals at ECX as of mid-December 2019 vs 2018:

Drilling into the arrivals 2019 vs 2018, the figure that jumps out is the big reduction in Washed Sidamo arriving at ECX, Limu coffees are actually up vs this time last year; Naturals are also down by nearly 50%; overall there is a sharp decrease. The reasons for this situation were highlighted last week.

Turning to Export Prices offered by shippers this week, these were all over the place! With prices offered for standard Sidamo 2 diverging by as much as 60 c/lb… this is a reflection of shippers positions, ECX replacement levels and cherry prices; there seems to be a serious concern about New Crop availability of Sidamo 2 and 4;

Weather continues favour crop development and drying, some washing stations in Sidamo will close next week, since cherry arrivals have started to dwindle in recent days .

Prices for cherry are still very firm in the Southern regions, washing stations are currently paying between 18 and 25 Birr/kg cherry in Sidama, Guji, and Yirgacheffe.

by Charles Seara Cardoso

Having sold big volumes into the recent rally shippers are concerned that they cannot cover their more immediate shipments; it is a fact that volumes arriving at the ECX are disappointing and well below what shippers would normally expect to see this time of the year; a combination of weather and economic policy are behind this situation. Firstly,  the unusually wet conditions that had us concerned in November delayed the harvesting and consequently the normal flow to ECX; secondly the government appears to be making no secret of pursuing a strategy of steadily devaluing the  Birr, to reach the black market rate this would require a further devaluation of approx. 8 Birr (Black market rate around 40 birr to the USD), the Birr lost 2 Birr vs USD in the last 2 months. If you are an agrabe it would make sense to delay the sale of coffee in Birr for as long as possible to maximise the Birr price. In this very volatile terminal market, time will tell if this will pay off, for now it would seem that local traders are in the driving seat.

Birr lost 2.5% vs the USD since the beginning of December and 7.5% since the beginning of November.

Weather continues to benefit picking and processing, coffee quality concerns related to humid conditions should not materialise.

Prices for cherry are still very firm in the Southern regions, washing stations are currently paying above 20 Birr/kg cherry in Guji and Yrgacheffe.

Summary of Coffee Ithaka Jimma and Guji tour from 2nd to 13th December

The team travelled extensively to Guji and Jimma coffee zones, in both cases with exporters’ representatives, driving to Guji, passing by Yirgacheffe and Sidamo. In Jimma zone we drove through the coffee producing areas of Limu Kosa and Limu Seqa, among others. We were glad to not have seen any sign of political or socio-economic unrest in both the Southern and Western regions.

Crop Development and Quality

In Guji, coffee cherries are ripe, well-developed and show no signs of disease. Likewise the coffee trees are looking healthy. Crop development and processing:

Naturals: in the last 2 weeks of November, untimely rains fell in Guji zone, however sundried coffee showed no signs of mould damage – we assume farmers and sundried station managers are doing their part by covering during rainy episodes. Same thing for Jimma zone.

Washed: during our trip to Guji the skies were clear. Some parchment was cracked open due to midday sun exposure, which might affect washed coffee quality. In Jimma the weather was hot and the sun was strong, which caused all parchment to crack and to dry in 7 days rather than the ideal 21 days.

For Sidamo region we maintain our 22% reduction in the crop (vs 18/19 crop) published in our October Crop Report, however in Guji, farmers and processing station owners are confident that the 2019/20 crop might be as good as last year’s, despite being an off-year.

In Guji harvesting started 4 weeks ago (mid-Nov) and around 30-35% of the crop is expected to have been harvested to date. In the West, 75% of the Jimma/Limu crop has been  harvested.

Guji cherry Prices

During the team’s trip in Guji coffee zone, 1st week Dec, fresh cherry in Bule Hora and Kercha (West Guji) was being sold between 17 and 20 ETB/kg, giving an FOB Djibouti equivalent of 200 to 235 US ct/lb

by Charles Seara Cardoso


  • 2018/19 crop (on-year) 

The 2018/19 crop is revised to 426,987 MT (7.12 M bags), which is 10% higher than the 2017/18 crop. Washed and sundried production estimates are revised at 63,674 MT (15%) and 363,313 MT (85%), respectively. 

Disappearance has remained fairly constant with end of year 2018/19 stocks increasing by approximately 0.5 M bags. However, the composition of these stocks is heavily skewed towards Naturals from the Western region. 

Southern coffee stocks are at minimal levels; disappearance during the 2018/19 season has been very good due to falling differentials, in particular for Washed coffees, which reached levels below Colombia. 

  • 2019/20 crop (off-year) 

The 2019/20 crop is estimated to be 411,119 MT (6.85 M bags), which is 4% lower than the 2018/19 crop. The volume of washed and sundried production is estimated at 57,866 MT (14%) and 353,254 MT (86%), respectively. 

Coffee harvesting has started in some areas of the South-Western region during the second half of August 2019. Coffee harvesting is expected to peak in November 2019 for most coffee producing regions, and more than 90% of the crop will have been harvested by December 2019. Harvesting of the 2019-20 crop will be completed on February 2020. 

Farmers along Guji, Sidamo and Yirgacheffe area started picking and selling red cherry during late September. Most coffee washing stations of Southern region have completed maintenance of pulping machines and construction of coffee drying beds before mid-September 2019. Coffee washing stations started processing washed coffee in late September. 

The report highlights the discrepancy between the ECX prices and FOB prices for the same qualities. The authorities have indicated that they wish to address this discrepancy by forcing shippers to sell at a price that is higher than the price paid at the ECX. A new regulation is to come into force that gives the Coffee Liquoring Unit (CLU) authority to stop shippers from exporting when they cannot prove that the sales price is above the ECX price paid for the coffee they are wanting to ship. 

In November 2019 there will be a referendum in Southern Ethiopia, to decide on splitting the Southern Region into 2 smaller Regions, granting limited autonomy to the people of these areas. This could be a reason for the downstream flow of 2018/19 stocks, meaning that the remaining coffee will be in the hands of exporters, as farmers and akrabis (local traders) prefer having cash to holding stocks in times of instability. 2 

In May 2020 there will be elections in Ethiopia. Whereas we hope that this exercise is peaceful, past elections have brought some disruption to the normal flow from farmer to exporter. If farmers and akrabis feel that there will be security problems, this would imply a faster than normal coffee flow from local players to exporters. On the other hand, if there is instability in coffee producing areas after the elections there could be disruption to the normal flow from up-country to export during the second half of the year. 

  • 2020/21 crop (on-year) 

The 2020/21 crop is projected, under normal conditions, at 478,690 MT (7.98 M bags) and the weighted production probability is 449,121 MT (7.49 M bags). 

The crop picking and processing is developing well, below our estimate of what has already been picked in the different regions:

Djimma                65-70%

Wellega/Limu    55-60%

Sidamo                 45-50%

Guji                        20-25%

Yrgacheffe          < 20%

Weather has improved over the past week benefitting ripening and drying, in other words, less rain and more sunshine! Our concerns that the weather could impact this season’s quality have greatly diminished in December.

Prices for cherry are still very firm in the Southern regions between 17 Birr and over 20 Birr per kg of cherry; this will keep differentials high, negating the C bull run of recent days and weeks. Shippers are well sold, having taken advantage of the H early push to 125 and now rather cautious and unsure of what prices will have to be paid to cover shorts since only a small volume of the new crop is reaching the market. Current flat priced offers from shippers translate to firm differentials, particularly for washed coffees since many of our suppliers have washing stations or offtake agreements with washing station owners and are seeing cherry prices giving them FOB prices for Sidamo and Guji well over 200 c/lb. Differentially prices for Naturals have decreased considerably in the last 4 weeks however they are now fairly firm considering that the C continues to rally, today Lekempti 5 and Djimma 5 are trading 20 and 24 under May FOB L/C for March/April shipment same as last week.  

by Charles Seara Cardoso

Increased volumes of New Crop are arriving at ECX and therefore most exporters have started offering New Crop for 2020 shipments onwards, Washed coffees are offered for February shipment onwards and Naturals for March onwards, however, we would have to add 1 month to that to be on the safe side! Prices at the ECX are reflected in our price indications below:

DJIMMAH 5-24-24
LEKEMPTI 5-20-20
DJIMMAH 4-13-13
LIMU 2N/A+25

The Birr that normally devaluates to the greenback at a fairly constant and steady pace has recently accelerated its devaluation having lost 4% in about 3 weeks:

Weather-wise rains have been less intense than in previous weeks in the Southern coffee-growing region, we continue to monitor the situation; for an explanation of what is going on in East Africa with the weather, the BBC is much better at this us… pls follow the link below:

by Charles Seara Cardoso