The number of people testing positive for Coronavirus stands at 12, up from 6 the previous day. The government has started to take social isolation measures, government employees are (as much as possible) to work from home; at ECX the number of players allowed to participate in the daily trading has been restricted to reduce the number of people on the trading floor; exporters have been given particular days of the week which they can attend the ECX, limiting the number of days in a week when they can buy coffee at ECX from 5 to 2 or 3.

The government has warned that it may take further steps to increase social isolation and restrict normal daily life in a bid to limit the spread of the virus; we do not know what these measures will be but if what has been happening in other parts of the world is anything to go by, economic activity will be constrained. So far the effects of the worldwide pandemic have been very limited in Ethiopia however do not rule out increased disruption to the normal flow of coffee from the interior to Addis and from Addis to FOB Djibouti.

It will depend on how the Governments in Ethiopia and Djibouti react and what measures are put in place. We cannot predict how individuals will react either, stakeholders along the supply chain can also unilaterally take actions that result in delays in contract execution, so far all seems to be functioning, but we know from what has happened in Europe, Asia, and the American continent that things can change very fast and without warning.

At ECX Lekempti coffees continue to flow in good volumes and quality is good; our quality concerns of earlier in the year have for now disappeared; the shortage is in Natural Southern coffees, the volumes of Sidamo 4 arriving at ECX are extremely small.

The Birr is trading at 32.75 to the USD, in March the Ethiopian currency devalued 1.4% to the USD

by Charles Seara Cardoso

Apologies for the delay, these are difficult times as we all struggle to adapt to a new reality!

There are now several cases of Covid 19 in Ethiopia and it seems that we are in a Déjà vu once again, as everywhere else, we expect the situation to worsen.

As far as the Ethiopia Coffee Supply Chain is concerned, so far the only consequence of the worldwide pandemic seems to be a shortage of containers in Addis which is delaying loading.

Minimum Registration Price restrictions are really starting to bite and shippers are having to come up with creative ways to continue to ship; last week some shippers manage to convince NBE officials that they had differential contracts that needed registering at below current Minimum levels, others are being creative with contract grades. Meanwhile export sales are down just as the traditionally busy season begins.

We are increasingly hearing of pricing issues in Vertical Integration supply chains, as washing station owners are requesting for much higher than market prices, leading to shipment delays and shippers having to purchase coffee at ECX which in turn is putting pressure on ECX prices. 

Natural Coffee registrations are also very much reduced although with the terminal market under pressure differentially current prices could become attractive.

Birr 32.56 to the USD.

Our Lisbon office is closed and the team is working from home; our quality lab in Lisbon is therefore not working and this function is currently being solely carried out by our Addis office. This will have some implications for the way that we control quality and get samples to our customers, please bear with us as we try to overcome the current movement restrictions that we all have.

by Charles Seara Cardoso

Ethiopia shippers are increasingly frustrated by the minimum price policy and export sales and registrations have reduced sharply as the levels are unaffordable for most buyers; one exporter has been left reeling when not allowed to register a sale at 3.45 c/lb because the Minimum Registration Price was 3.60! No one seems to fully understand how the Minimum prices are set and inconsistency between these prices continues, Natural Limu 4 price is higher than Natural Limu 2, for example. These glaring inconsistencies reflect badly on the Coffee & Tea Authority, which increasingly being labelled incompetent.  On the plus side, no Coronavirus cases have been detected in Ethiopia!

At ECX volumes of Naturals have increased and now look much better than only 3 weeks ago and more or less where we would expect them to be; However Southern Region coffees are still scarce and in much lower quantities than in the last 2 years:

We know that in the South the crop was delayed and is smaller this year, however there must be other reasons behind the low volumes coming to ECX and we believe that these lie in Vertical Integration; coffee must be by-passing the ECX altogether and coming to Exporters warehouses directly from the growing areas.

Forex is currently 32.44 Birr to the USD

by Charles Seara Cardoso

Minimum price rules are creating havoc, we have had to register Sidamo 2 contracts as Guji 2 because the min price for the latter is realistic and lower than the former, which really does not make any sense at all. All week D5 min price has been higher than L5, Yirgacheffe lower than Sidamo and so on… generally speaking the min prices have increased every day while the terminal market collapsed this week. Trading in Ethiopia is now at a standstill. The government is tightening the supply of money, banks are not lending and exporters are struggling to finance coffee purchases to meet their commitments; if this situation continues ECX prices will fall not only because export sales dry up but because shippers will not have cash to buy at ECX.

As we understand it, if there are no export sales registrations (or a very small volume registered at the minimum price) then the Coffee and Tea Authority will reduce the minimum price allowing for more volume to be registered and exported; however we are yet to see this in practice and the policy seems a little vague. What happened in Sesame Seeds was that the trade came to a holt; first the Export trade and then the internal/ECX trade; In coffee eventually this could result in delayed shipments and delayed deliveries to roasters, in other words “disruption” to the flow from origin to destination market.

At ECX we are seeing a much greater volume of Lekempti come to the market; there are still concerns about quality because what is coming to the market currently is very poor. Shippers are still hoping that the quality of Lekempti will improve and to be fair we expect approx. 1,500 MT to come to ECX every week over the coming 8 weeks, so the jury is still out.

The Birr is currently at 32.35 vs the USD

by Charles Seara Cardoso