After the excitement of a week where prices seesawed on fears of a frost and the realisation that there was no frost, trading in Ethiopia settled down to a more lethargic stance. Many shippers sold as the market approached 230 c/lb but retracted as the market tumbled. Liquidity issues forced the hand of some Washed Arabica long holders into accepting below asking prices and the same can be said for some stale Grade 5 stocks that were released. As the NY market again rocketed on Thursday shippers increased their offer prices in the expectation that it would reach higher levels. Business activity is slow, shippers are still weighed down by high priced stocks, difficult logistics and tight replacement prices. Demand is only sporadic and thin.

On a FOB basis, Grade 2 from the South is above +100 and Grade 5 at -25, Grade 4 are trading at plus double digit differentials.

Ethiopia’s Tedros Adhanom Ghebreyesus has been re-elected as the World Health Organization’s (WHO) head for a second five-year term.

Birr 51.55 = USD 1

Have a good weekend.

This week the NY market had quite a trading range due to recent weather concerns that never materialised into a serious problem. In this “yo-yo” environment trading is quite frustrating for all, however some business did materialise. Some exporters took the opportunity to sell has the terminal market rallied however a fair amount of business was left undone as the market tumbled in the later part of the week. On a more positive note much more coffee is getting loaded and moved to the port giving hope that this months shipments will supersede April’s poor performance. We expect that the business concluded this week will release some of the space pressures on mills and that throughput will accelerate in the coming weeks. Differentials for Grade 5 at around -25 FOB CAD and Washed coffees from the South attracting differentials well in excess of +100.

The forex rate has been very stable in recent months. The pace of devaluation has slowed down considerably, could it be that the demand for USD has also slowed down? Coffee exports have been at record levels in terms of USD and MT, with the July to April period exceeding USD 1 billion in value; coffee is the biggest foreign currency earner and with the economy slowing down, is the demand for USD lower? I would be surprised that the demand for hard currency from business has decreased but then again, everything is possible…

Forex Birr 51.51 = USD 1

Have a good weekend.

The April Export figures are in, unsurprisingly shipments are sharply down vs April a year ago and the previous month (March 22). A combination of logistical problems (which we have been discussing last couple of weeks) and the terminal market downturn since the latter part of February are reflected in this very poor export performance figure. Export volumes should be increasing month on month not decreasing, we think this may only be a blip since shipping lines have been addressing the lack of vessels calling Djibouti and container availability of the past few weeks. Stocks of Washed coffee held in Addis are still high, exporters have lowered their asking prices however, differentially prices remain very high. Some mills are so congested with with unprocessed washed coffee that are close to gridlock making it difficult to get naturals processed. Business activity remains somewhat muted despite the 16 c/lb in NY move on Wednesday!

Ethiopia’s telcoms giant has started rolling out a 5G network in parts of Addis:

Little change in the forex rate Birr 51.47 = USD 1

Have a good weekend.

We are going to have to discuss shipping again! We thought that things could not get worse but they have. One of the main shipping lines out of Djibouti would normally operate 1 vessel a week however during the whole of April operated 1 vessel and again in May will only operate 1 vessel, with only 2 scheduled for June; this totals 4 vessel in 3 months, whereas we would have expected 4 vessels a month! MSC this week advised shippers that they would have containers to stuff but that they would not be given a booking on a vessel and if containers overstay the allowed time at the port in Djibouti any port demurrage charges would be for the shipper to bear. This is risky both for the shipper and the buyer since the shipper is exposed to open ended demurrage charges and for the buyer since quality will be negatively impacted if containers lay about in Djibouti for weeks on end waiting for a vessel. Alternative shipping lines are available however current freight rates vary wildly between shipping lines which strain costs, particularly in the current upward spiralling cost environment (increasing interest rates, warehouse rates and trucking costs). Furthermore, ocean transit times are once again out of control, we have cargo in transit from Djibouti to Antwerp which was shipped over 8 weeks ago while at the same time, on the same route, with the same shipping line we have cargo arriving within 3 weeks. Planning has become guesswork! In this environment we are bracing ourselves for delays, increased costs and a lot of frustration!

Shippers’ prices ideas when worked as differentials uninspired buyers this week, trading activity has been limited. Although the wide ranges seen on the terminal market over the past few days would normally allow for some business activity, asking prices are simply too high to attract serious interest. Afterall, 200 c/lb FOB when KC is at 250 is not the same as when KC is at 220! It is taking some time for overseas price ideas to be reflected upcountry, in farmgate prices, however soon shippers’ offered prices will start to better reflect the lower KC levels that followed the Russian invasion of Ukraine and the subsequent exit of speculators from the coffee markets.

The BBC reported this week on clashes between Christian and Muslim groups, for more on this please follow the link:

Birr 51.42 = USD 1

Have a good weekend.