The number of COVID related deaths in Ethiopia has passed 700 worryingly, over 50% of these registered in August, which indicates that the disease is accelerating in the country. Conversely, shipments in August are reported sharply down to 1 year ago, we have told that whereas in August 2019 shipments were over 30 K MT, this August they are around 15 K MT, 50% lower. Prices at ECX remain high and volumes offered disappointing, leaving shippers short of what they need to cover commitments.

Quality concerns surrounding the current crop are ongoing, particularly for Naturals, this crop cup quality and green appearance is, very much, on the low side. Looking forward to the next crop things are more encouraging, the rainy season has been good and the crop is developing well. We are in the preparatory phase of our crop tour however anecdotal commentary from our partners in Ethiopia is that we should expect increased volume and better quality for 20/21. 

Birr is at 36.10 to the USD, losing nearly 3% during the month of August.

by Charles Seara Cardoso

The recent NY rally gave shippers an opportunity to sell to the trade which booked some decent differentials. Now, these commitments need to be covered at ECX which have pushed the prices at the Addis Ababa Exchange through the roof to levels way above where shippers sold, Lekempti traded at ECX this week at levels up to 140 c/lb FOB equivalent! Djimmah 5 FOB equivalent was also higher, etc…

Volumes traded at ECX last 3 years at 19th August:

19-20 CHANGE
MT @ 19 AUGUST201820192020MT%
LIMU/OTHER WASHED               17,600                 14,175                 15,002             827 6%
YIRGACHEFFE                 4,916                   6,059                   3,262 –       2,797 -46%
SIDAMO/GUJI               19,076                 20,639                   8,496 –     12,143 -59%
Total Washed               41,592                 40,873                 26,760 –     14,113 -35%
MT @ 19 AUGUST201820192020MT%
SIDAMO               14,409                 18,808                   8,720 –     10,088 -54%
LEKEMPTI               35,245                 36,042                 30,253 –       5,789 -16%
DJIMMAH               36,874                 30,501                 33,457          2,956 10%
OTHER NATURAL               34,322                 39,421                 33,548 –       5,873 -15%
Total Natural             120,850               124,772              105,978 –     18,794 -15%
Total             162,442               165,645              132,738 –     32,907 -20%

Forex is also devaluating steadily, 1.5% since the beginning of August, now at 35.85 to the USD.

by Charles Seara Cardoso

The rally in NY this week made for some more attractive differentials which in turn allowed for some shippers to register some contracts and Roasters book some more attractive (than in recent weeks) differentials. Djimmah traded down to below 20 under FOB CAD and Lekempti traded at a small premium to Djimmah, which allowed biz to be concluded. Conversely in Washed qualities some producers and other physical long holders managed to sell a few boxes that they were holding as a direct consequence of disruption to demand caused by Covid-19 which resulted in contract cancelations and postponements.

There are increasing reports that some Exporters’ experiments with Vertical Integration have not worked out the way they were expecting and therefore will not be keen to repeat the experience next season, forcing washing station holders to find alternative financing. It is also reported that some larger shippers that are in difficulties have set up new companies to continue trading while they sort out problems with their business that are in trouble.

At ECX volumes are low and prices up as a direct consequence of the smaller quantities and increased pressure to cover new and previously established export commitments. Local market coffee prices are very high approximately double what they were this time last year, the local currency has devalued considerably in the last 12 months and inflation is high, however, neither these 2 factors can explain the doubling of the local market coffee price!

by Charles Seara Cardoso