Heavy rains are disrupting the transport of coffee from growing areas to ECX warehouses and therefore limiting the supply of coffee to exporters and pushing up prices. Exporters are reluctant to cover shorts at ECX and requesting for delayed shipment to allow for more time to purchase coffee to fulfil commitments. Heavy rain at this time of the year are unseasonal and if it does not stop in the next few weeks could affect the imminent harvest by delaying the ripening of cherries. We are also very conscious of the quality problems last year’s wet weather caused during the post-harvest processing period. Drying coffee in wet conditions is rather difficult! The result is a high percentage of defective beans and increased instances of mouldy/phenolic/earthy cups. In terms of export volumes some of our partners are expecting that these are currently down by as much as 40% viz-a-viz a year ago, without export stats to corroborate it is hard to know, however we believe that exports are down compared to this time last year.

The Minimum Prices have remained stable for the past few weeks however with the terminal market hovering around 110-115 c/lb differentials are uncompetitive.

Forex, the Birr is at 36.68 to the USD.

Have a good weekend.

Following some very decent volume of business enabled by the recent rally in NY, business has come to an abrupt halt as ECX and Exporter offering prices have risen and the terminal market price declined. Volumes at ECX continue to disappoint and shippers in need to cover recently established shorts scramble for the reduced volumes on offer. Below the current sales at ECX at 15th September and the volumes at the same time in 2019 and 2018:

In addition to the lower traded volumes, the quality of the lots sold is much poorer than in previous years, meaning that shippers are ending up with a higher percentage of local market products and less exportable quality from what is purchased. We have not seen recent official export figures but we suspect that these will also be down on last year’s. 

Daily Covid cases and casualties have declined in Ethiopia in last 2 weeks, the country is seemingly moving in the right direction. 

Slow but sure devaluation of the local currency, currently 36.54 vs the USD.

Have a good weekend.

By Charles Seara Cardoso

It is the New Year in the Gregorian Calendar, the past 12 months have been interesting, I am sure we all agree! But we do not want to go over the problems of the past, let’s take a look at our first impressions of the New Crop. Coffee is just about starting to mature in the lower coffee growing areas. Things are looking peachy! We are looking to a better crop both in terms of quality and quantity, truth be told this current crop is pretty disappointing on both counts; our initial projections are for a better crop in 20/21. Particularly in the Southern coffee growing regions, Sidamo, Yirgacheffe and Guji we are expecting a marked increase in production this coming season. Some of the people we have had conversations with in the last few days are expecting the best output in the South in the last 3 years, a relief to many stakeholders that have viewed the decline in volumes from these areas with concern.

On the other hand news about current crop output is much less encouraging. ECX warehouse stocks are at very low levels, seemingly the lowest ever and exporters continue to worry about their commitments. Once again the prospect of further defaults and postponements lingers…

Covid continues to be of concern, a further 100 deaths this week and around 10,000 positive tests.

Internal prices remain very high, internal consumption and the lack of coffee for this segment of the market is the main driver of prices. Export offer prices have tightened along with differentials, so export business has not been as brisk this week.

Forex: 36.46 Birr to the USD.

Have a good weekend.

Again this week’s NY action has allowed shippers to sell more; those that held out for better prices over the past weeks are finally being able to move their stocks. Many of the larger shippers are in dire straits having sold larger volumes at prices below 100 c/lb find themselves unable to cover due to low volumes on offer at ECX and very high prices bid as there are many buyers for the reduced volumes. We are hearing that washouts and defaults are rife; shippers have meet government officials to voice their problems and ask for help in sourcing coffee. A major concern is the quality of coffee that shippers are receiving from ECX warehouses; exporters are eager to stamp out corrupt practices at ECX warehouses, where lots destined to be sold at ECX are being granted certificates of quality much higher than they deserve, leading to exporters paying high prices for low quality.  

Covid rages on with a further 10,000 cases in the last week and a further >100 deaths attributed to the disease.

Birr is at 36.38 to the USD.