All

The Coffee and Tea Authority is continuing with their ECX Maximum price policy, however price limits have been increased so there is less tension between collectors (Agrabes) and the C&TA. Export Registrations of Washed Coffee are very disappointing so the pressure is on for the C&TA to reduce minimum registration prices for grade 2 coffees from the South. Volumes at ECX are still reduced and shippers continue to struggle to cover shorts established long ago and in many instances rolled over. Some of the larger exporters have stopped offering for nearby shipment not wanting to increase their very short positions. Several donor organisations are limiting their support to Ethiopia over concerns of Government actions in the North of the country so we expect that pressure is mounting on Exporters bring in foreign currency to alleviate the shortfall in overseas remittances from international partners.

Unknown assailants attacked a village in North Western Ethiopia and it seems that a massacre has taken place. This comes the day after the Prime Minister toured the area, therefore it is an obvious conclusion that this occurrence is linked to the PM visit and the recent fighting in Tigray region. It always was a real concern that having stabilised the main cities in Tigray, the security forces would be facing guerrilla warfare and terror attacks. We expect that these strikes towards civilians will only strengthen Central Government resolve to subdue Tigray fighters. Peace in Ethiopia is not assured in the near term.

The harvest is entering its closing stages, cherry prices range between 20 and 27 Birr per kg, a considerable variation in prices and depending on the area. In Yirgacheffe  areas competition is strong, whereas in other areas coffee is starting to dwindle and there is less demand.

Birr 38.94 to the USD

Have a nice weekend, stay safe over the festive period.

All

Ongoing limited supply to ECX with Djimmah 5 trading at around 175 c/lb FOB equivalent; FOB buyers are bidding around 95 c/lb and the local market is paying 350 c/lb, so it is no surprise that shippers do not have anything to sell and that coffee is not arriving at ECX warehouses. Any coffee that is around is finding it’s way to the local market illegally but the incentive is too great. Volumes of Naturals at ECX are pitiful, yesterday 166 MT of Sundried (all grades) were offered; we do not expect to see any meaningful quantities of Djimmah type until February and Lekempti/Sidamo (Natural) until March so local tightness is likely to continue for a few more weeks.

Minimum registration prices for New Crop Sidamo 2 is over 220 c/lb FOB, which is too rich for most standard Sidamo 2 buyers. The Coffee and Tea Authority (CTA) does not seem to understand that there are different qualities of Sidamo 2 and that most will only find a market if traded at much lower levels; in time we believe that this minimum registration price will be reviewed to better reflect levels where larger buyers and standard quality is tradable.

Ethiopia appears to be much more peaceful this week although there remains a heavy military presence in Tigray region.

Birr/USD = 38.34

Have a gd wkend.