Turbines start producing electricity

Africa’s largest hydroelectric plant started producing electricity this week. Under construction since 2011 the dam is expected to double the Ethiopia’s electricity generation capacity. It’s existence has been hugely controversial, Egypt and Sudan have continuously expressed concerns as they are very dependent on the Nile for drinking and irrigation water. Power generated by the Grand Ethiopian Renaissance Dam (Gerd) is expected to be exported to neighbouring countries and therefore become an important forex earner for the Government and potentially allow for a softening of the current forex restrictions which are crippling exporters.

On the coffee front this week as been a much quieter week than the last two, due primarily to the Terminal market’s retraction following the events unfolding in Ukraine; additionally shippers sold a lot during the first 3 weeks of February and are now focused on covering commitments rather than increasing sales.

Birr 50.77 = USD 1

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Another busy week

Increased availability of Naturals and a terminal market above 250 usc/lb again propelled business to get concluded this week. There seems to be reduced interest in Washed coffees as prices are deemed rather high. Naturals at significant discounts to Brazil prices continue to attract attention and since trading within Ethiopia is now allowed, activity intensified. We believe that there have been very significant export registrations this week. Coffee is starting to arrive in Addis for milling in a more meaningful quantity and we expect to see many samples in the coming weeks.

There are increased concerns surrounding the quality of Washed coffee, particularly from the South (Sidamo, Guji and Yirgacheffe), additionally shippers are complaining that they are struggling to sell these qualities to overseas buyers due to high asking prices, which are a result of unchecked cherry prices paid during the harvest.

According to the Centre for Global Development, China’s two largest overseas development banks invested $23 billion in infrastructure projects on the continent between 2007 and 2020. This is $8 billion higher than the combined contributions of the other top eight lenders, which include the World Bank, African Development Bank, and US and European development institutions. One wonders when time to payback comes, what this will look like!

News on the fighting raging in the North of the country between Tigray Rebels and the National Army was been nearly zero. The only news on the internal conflict this week comes from the West of the country where Oromo Liberation Army (OLA) rebels attacked trucks carrying fuel supplies for a Sugar refinery in Horro Guduru.

Birr 50.62 = USD 1

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5 Million bags?

February export figures again did not disappoint, over 13 K MT brings the 11 month period March 21 to Jan 22 to over 290 K MT and keeps us on a path to reach 5 M bags by the end of Feb 22! Admittedly 13K MT is the lowest export figure for many months, but this was expected given the strength in shipments during previous months, however a mere 10 K MT in Feb are needed to hit the 300 MT in a year milestone.

Business in Ethiopia this week has been a little more buoyant aided by the resurgent terminal market hitting new highs. Shippers are also seeing improved internal flow and eager to get going in Naturals since the volumes of Washed coffees available have been rather disappointing this season.

Forex Birr 50.26 = USD 1

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It is quiet on all fronts!

It has been a quiet week on the coffee trading front in Ethiopia. Shippers are reluctant to offer, Naturals are currently not offered by agrabes even though the government announced the start of trading in Naturals this week. Washed coffees continue to be offered at high differentials even considering the recent strength in the terminal market, having bounced back from the 230 c/lb level. Quality of the first Washed coffees that we have seen is mixed. Quality of Limu 2 samples that have been presented with is good and promising, however Sidamo 2 samples seen have been lower than expected. It is possible (not confirmed yet) that shippers will try to overcome a shortfall in production in the South by mixing in washed coffees from other regions (quality will suffer if this happens). As we move on and more samples become available we shall be able to better assess quality coming from Sidamo and Yirgacheffe, we have not seen enough samples to pass judgement.

Addis Ababa has been in the grip of very tight security arrangements due to a Africa Union summit this weekend with many African heads of state in town. News of the internal conflict has not been forthcoming this week, so the assumption is that fighting is subdued.

Shipments for January are typically low and this January is likely to a typical one. We are expecting official export figures in the coming days.

Birr 49.97 = USD 1

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