Accurate and reliable information about the war is difficult to find and news from reliable sources is only sporadically published. However, we understand that the front has advanced much closer to Addis following the taking of Shewa Robit town by TPLF forces, the map below clearly shows the advances that have been made by the Tigray forces in recent weeks. Many foreign governments have advised their nationals to leave the country, latest being Germany and France following the USA and UK. However, putting things into perspective, the coffee growing areas, mostly to the West, South West and South of Addis Ababa, whereas the fighting is focused to the North of the capital:

Central Government has double down, believing that the TPLF forces can be repelled militarily whereas the rebels have been emboldened by recent territorial gains and the capture of 16,000 Government soldiers. Recent moves by the African Union to mediate between the waring parties have been put on ice as the fighting intensifies. The Prime Minister has decided to lead from the Front and has been seen in military fatigues surrounded by soldiers. Meanwhile in Addis Ababa life continues more or less normally, coffee continues to get processed, stuffed in containers and transported to Djibouti for shipment. The logistics are slow, mostly because containers are hard to come by (as a consequence of low imports) but coffee is getting shipped. Our hope and expectation is that the fighting will stop before Addis Ababa comes into play avoiding needless suffering and destruction, regardless of which side claims the upper hand in the ongoing conflict.

In the growing areas the harvest continues, not all Washing Stations are operating due to a lack of funds and the high prices being paid for cherries. However the conditions for harvesting and processing are good; our expectations of a larger crop are being met, however we are expecting a higher proportion of the crop in Naturals vs Washed coffees. This will be reflected in export prices by firm differentials for Washed coffees (less of them available) and firm Natural differentials due to firm prices for Brazil Natural Arabica qualities.

Birr 47.76 = USD 1

Have a good weekend

The Coffee harvest is progressing well. Cherry prices are all over the place, where there is more competition prices approach 40 Birr/kg cherry where there is less competition cherry prices are closer to 30 Birr/kg; this 10 birr/kg range equates to around 75 c/lb green equivalent! In Limu areas where competition is stronger prices are by and large higher than in Guji at present, where not all washing stations are operating yet. We have heard reports that a number of washing stations are not operating because the agrabe/owner is struggling to find financing or does not believe that the cherry price allows for a margin to be made. Security wise there are no major concerns at present in the coffee growing areas and both farmers and agrabes are being able to harvest and process the crop unabated.

External pressure on the waring Ethiopia parties is mounting; the US government has removed Ethiopia from the AGOA group of countries that have preferential access to US markets. While the UN has not exonerated Tigrayan Forces from human rights atrocities committed during the recent campaign in Amhara region. Behind the scenes, African and other governments are exerting increasing pressure on both sides to resolve the conflict. The overwhelming worry is that the conflict results in the disintegration of Ethiopia and further destabilises the wider Horn of Africa region.

Inflation has stopped going up, albeit stabilising at 34%! Food inflation however continues at very high levels, around 40% which is putting a lot of strains and pressures on ordinary Ethiopians already reeling from the fighting and subsequent uncertainty.

Birr 47.64 =USD 1

Have a good weekend

Exports continue to be strong, granted there is a reduction vs. September as expected, however over 22 K MT in October is a record October! March to October shipments in 2021 are 38% higher than for the same period in 2020 and 18% higher than in 2019 (which was the record export year). With 4 months to go to complete the export year (March to Feb) we are now considering that the 20/21 crop could be the first that gives rise to 5 Million bags in Exports.

Meanwhile the 21/22 crop is progressing well with the Guji area also starting to be harvested. Prices for cherries range between 28 and 37 Birr per kg (225 and 300 usc/lb FOB equivalent) .

On the political front, the latest BBC report highlights the human tragedy that shadows the fighting but also gives some hope that the African Union may be able to get the opposing sides to the negotiation table .

Indeed the fighting does not appear to be affecting the flow of coffee from Addis to Djibouti, we loaded several trucks with stuffed containers this week and although the availability of containers continues to be limited, once they become available, they get stuffed and move to Djibouti promptly. Vessel slots are hard to come by however vessels are calling Djibouti, even if less frequently than we would wish for.

Birr 47.52 = USD 1

Have a good weekend.

Hi All

The government has declared a State of Emergency giving itself the ability to quickly act to mobilise against Tigray rebels and other forces that have been fighting the National Army and other militia aligned with governmental forces in the Northern part of the country (in Tigray, Amhara and Afar regions). The fighting has been intensifying and the Government forces have been losing ground to the rebels, now approximately 350 Kilometres to the North of Addis Ababa. There are some reports that the road that links Addis to Djibouti is a target for the rebels, however we understand that this important link is still operating normally. In addition, there are instances of instability in the South (Oromia) and in Wellega, these have been a constant occurrence in the past few months and are ongoing. In Addis itself life is normal, offices and processing facilities are operating normally; we are drawing samples, loading containers and supervising processing at several locations in and around Addis Ababa. Our office is working as it usually does.

For a short video on the humanitarian crisis that is unfolding pls follow the BBC link:

Prices continue to increase in Ethiopia, the annual inflation rate accelerated for a fifth consecutive month to 35% in September, its highest level since February 2012. In particular, Food prices continued to increase (42% vs 38% in August), staples foods such as bread, reflecting the impact of adverse weather conditions and the war raging in the North. Ethiopia is also on the verge of being removed from the AGOA group of countries and if this were to occur would lose the preferential tariff treatment that this agreement confers in trade with the USA, coffee trade, fortunately, would not be affected.

On the coffee front, quality of recent arrivals in Addis is poor, the dregs are starting to arrive, it is likely that shipment quality during the end of 2021 and start of 2022 will be lower than what we are shipping at present. Coffee harvest is not being affected by the ongoing political instability, there is a small delay in ripening of cherries in some areas but so far the arrival of the new crop is progressing well.

Birr 47.34 = USD 1

We wish all the best to our friends, colleagues and partners in Ethiopia during these difficult and trying times.

Fighting is intensifying in the Northern part of the country, with rebel Tigray forces taking several towns from the National Army in Amhara region. Of concern to the Government will be reports that the rebels are moving Southwards in the direction of Addis Ababa and that they are now 350 km North of the capital. The BBC has several reports including the USA government’s reaction to the latest reports of rebels advances.

It nearly seems inappropriate to discuss the arrival of the New Crop to market at this time of political instability and fighting, but that is what we need to do. The first arrivals from Tepi and Benchi Maji have started to reach the ECX and slowly but surely more coffee growing regions will start harvesting. Cherry prices converted to USD are higher than last year and these tend to increase over the harvest period as competition among agrabes intensifies. This season the aforementioned political instability and more restrictive financing environment might diminish pressures at farmgate level, time will tell. What is likely, given the ongoing devaluation of the local currency vs the greenback and the higher terminal market this year, is that cherry prices in Birr will be the highest ever paid.

Birr 47.22 = USD 1

Have a good week.