Anther slow week on every front. Preparing coffee for shipment is slow or slower than usual! Enquiries from overseas are few and far between as our buyers assess the longer terms of the pandemic on their future needs. Meanwhile at the ECX prices increased this week as shippers cover shorts established before the recent drop in the terminal market.

Below we analyse the volumes traded at ECX up to the 3rd of April. We hope to update these in the coming days, however the patterns are set. Southern coffees continue to be offered in much reduced volumes to what had been traded at the same time in the past 2 years. Meanwhile the volumes of Limu are very healthy and undoubtably will be getting mixed into Sidamo shipments.

Natural coffees offers are also very much reduced from Sidamo, whereas Lekempti coffee volumes picked up to gain the lost ground that we saw at the start of the season.

This reduction in availability of coffee from the Southern coffee growing areas will bring some problems to shippers and traders alike in the coming months.

The birr has not lost much ground to the greenback this week currently trading at 33.54

Have a good weekend and stay safe.

by Charles Seara Cardoso

We continue to struggle with all stakeholders and service providers, much of the frustrations we are experiencing are a result of measures put in place to manage the pandemic that we are all living through.  So more delays this week in getting coffee processed, samples approved and the coffee shipped. Logistics which have always been a challenge this time of the year is currently nearly impossible to manage. However, we continue to make, albeit slow, progress on executing contracts. Business is slow with practically no inquiries as the focus seems to be on moving spots from roasters that have too much stock to roasters that have been seeing increased nearby demand.

Djibouti with a population of 1M people has recorded 1,000 cases of Covid-19; we are no experts, however it appears to be a high rate of infection. In Ethiopia the virus is spreading, however at what appears to be a slow rate of transmission.  

Business activity is also hampered by the erratic setting of minimum registration prices by the Coffee and Tea Authority, below table we give a snapshot of some of the most commercial common grades over the last 4 weeks:

We really struggle to understand these prices, the way that they are differentiated between grades and their evolution from week to week.

Meanwhile the volumes at ECX of Southern coffees both Washed and unwashed, continue to disappoint. Whereas Natural Djimmahs and Lekemptis are offered in good volume.

The birr is at 33.36 to the USD

by Charles Seara Cardoso

We are all currently operating in a different environment than what we are used to. Courier companies and postal services are taking longer to get our documents and samples to their destinations; customs officers appear to be more fastidious than usual and banks are taking much longer than usual to execute transfers and LCs… all these issues are probably a direct consequence of the social distancing measures implemented by different organisations around the globe trying to follow governmental directives. Similarly at origin we are experiencing delayed shipments. The reasons for these delays are:

  • Shipping Lines have reduced the number of vessels calling at East African ports therefore the number of spaces available are less and containers are getting left on quays not being loaded. Furthermore, admin staff shortages at shipping lines means that we are getting less timely information regarding bookings and container positioning; some lines have also experienced container shortages due to big changes in trade flows resulting from the pandemic; some have even had software problems.
  • Warehouses and Mills are working with reduced staff, resulting in lower processing and loading capacity. Furthermore, ECX has reduced the number of days shippers can access the trading floor causing a bottleneck on the flow from agrabe to shipper.
  • Many banks are experiencing a liquidity crisis and as a consequence are restricting credit to shippers that have contracts and opened LCs, stopping them from buying coffee to cover their commitments. 

Last week the Ethiopian Government had decreed a State of Emergency, on Saturday we learned some more details:

  • The decree has banned gatherings of more than four people unless there is an absolute necessity, in which case permits need to be acquired from authorities.
  • Handshakes are also not allowed.
  • People now also have to wear masks in public,
  • Public transport operators have to cut their seat occupancy by half, while hotels and restaurants are not allowed to have more than three customers on a table.
  • Landlords cannot evict tenants and neither can they increase rent.
  • Employers are prohibited from laying off workers on the grounds that business has slowed down.

In Addis day-to-day life seems unbothered by these announcements, mask usage and social distancing is not being implemented, and some places like markets remain as crowded as ever.

Meanwhile, trading at ECX and at FOB level continues, albeit on a smaller scale than we would have expected under normal conditions. Minimum registration prices are currently much more in line with expectations as the Coffee & Tea Authority appears to be listening to stakeholders, although some prices still baffle, why is the minimum price for Lekempti lower than Djimmah?

The birr has not been allowed to devalue at the same accelerated pace as other origin currencies, although the pace increased in March/April vs February/January, so far in 2020, the local currency has been allowed to lose a little over 4% to the greenback.

by Charles Seara Cardoso

The Ethiopia Government declared a State of Emergency this week, whereas in itself this did not bring any changes to daily life in Ethiopia it paves the way for the Government to impose stricter restrictions on the free movement of people and allows the authorities to order the population to obey rules by force if necessary. Social distancing measures are systematically being implemented such as restricting the number of passengers in public transport vehicles, etc. people are strongly being discouraged to move around the country although goods can still freely being transported between locations in Ethiopia and to the port in Djibouti. The Ethiopia Government has stressed that export activities are to continue unimpeded and our experience is that this is what is happening albeit with delays in banks handling LCs, Shipping lines confirming bookings and releasing containers. There were also some delays reported upcountry loading coffees and on the road network. Meanwhile, reported cases of Covid-19 so far in Ethiopia stand at 65 with 2 deaths and Djibouti 140 cases with 1 death.

Djimmah and Lekempti prices at ECX remained stable this week. One of the reasons for lower competition at ECX remains the liquidity issues experienced by exporters finding it difficult to access funds from banks to purchase coffee. Furthermore the minimum registration prices for all qualities over the last few weeks have put a stranglehold on normal trading activity.

Birr is currently trading at 33.05 vs the USD.

by Charles Seara Cardoso

We have been rather keen to get coffee on boats in the past 2 weeks. However, we are being frustrated by shipping lines closing containers out because they have no space even when containers are positioned for shipment. Normally this is a busy time of the year for Ethiopia shipments and the current pandemic is making timely shipments more of the essence!

The Ethiopia Government has asked it’s employees to work from home as much as possible and encouraged employees of private companies to follow suit. Concurrently the Ethiopia Government has been keen to stress that Export industries have to continue operating, therefore warehouses, mills and transporters are to operate as much as possible, normally. There are restrictions on the movement of private individuals across the borders with Sudan and Djibouti but not for import or export of goods.

Other East African countries have started to also implement social distancing measures with a view to slow the spread of the pandemic among the population. Uganda has taken the most draconian measures of all coffee exporting countries in the East Africa region resulting in stopping the export of coffee for at least 2 weeks. Fortunately, neither Ethiopia nor Djibouti Governments have intervened to stop shipments, however, we see Governments around the world taking unprecedented measures restricting economic activity so we must be mindful that this could happen in the countries where we operate.

We continue to not have any major issues with export logistics or export documentation, however, the quality of pre-shipment samples has been an issue that has slowed shipments. We are getting very frustrated with shippers, particularly with the quality of pre-shipment samples of Naturals (Djimmah 5 and Lekempti 5); currently, the ECX has big volumes coming through the trading floor and prices have decreased considerably in the last 5 weeks from 1,270 to 1,050 Birr per Ferasula for UIB6 (Illubabor Grade 6) the main component of Djimmah 5, a drop of 17% in price in Birr, nearly 20% in USD; below we convert the current ECX price for UIB6 to Djimmah 5 FOB Djibouti.

ECX Price in BIRR per FERASULA ( =17kg )       1,050.00
Exporter Costs (Birr per KG Green Coffee) 
Transporting coffee from upcountry to Addis (Birr 80 per 100kg)0.80
Processing cost (Birr 1,045 per MT Green Coffee)1.05
Cost of bags for local storage (Birr 55 per 60 Kg)0.92
Cost of bags for export (Birr 65 per 60kg)1.08
ECX commission charges  @ 0.49%0.30
Cost of insurance (Birr 1200 per 19200 kg)0.06
Weight loss 1%0.62
Transit cost (Birr 15,000 per container) 
=>cost of transit for shipping &stuffing0.78
Transporting coffee to Djibouti port 
(between 55-90 Birr per 100 kg, average Birr 65 per 100 kg0.65
Cost of financing 
  financing 3 months per kg1.96
(Financing at 11.5% p.a.) 
Rejects 5% sold in the local market 
Value of the Rejects in local market-3.53
(Reject price on average Birr 1200 per Frs* of green coffee) 
FOB Djibouti in Birr/kg (including 5% Reject)70.20
FOB Djbouti in USD/lb0.98
Exchange rate Birr 32.5 to 1 USD 

NBE Forex 3rd April 2020: Birr 32.88 = USD 1

by Charles Seara Cardoso