Bucking the trend, the inflation rate in June declined from 37.7% the previous month to 34%. It will be interesting to see if this can be sustained as a decline in inflation is a rarity these days! The oficial forex rate continues very stable to the USD, so imported inflation is limited to goods and services that have increased in price in hard currency terms.

Coffee activity in Ethiopia has been subdued in contrast to the shenanigans on the NY terminal market. Such swings on the terminal market can freeze physical business and that is what we have been seeing during the last few days. Quality offered by shippers is generally quite poor in quality and exporters are still experiencing difficulties in moving coffee from the interior to Addis for processing. This is due to the wet weather that is ongoing and will trigger an early crop later this year. Prices in the internal market (Ethiopians consumes up to 50% of the country’s production) have doubled y-o-y as a consequence of the increase in the terminal price and devaluation of the local currency. Notwithstanding this, internal demand remains strong.

In other news, Ethiopian Tamirat Tola took home the gold medal in the men’s marathon at the World Athletics Championships in the US. He crossed the line in two hours five minutes and 36 seconds – a championship record. Tola’s compatriot Mosinet Geremew came second. Ethiopia now has two golds after Letesenbet Gidey won the women’s 10,000 metres.

Birr 52.10 = USD 1

Have a good weekend!

June shipments reached 38 K MT, not quite the 40 K MT of June 2021 but not far off it! It is clear that the current logistics constraints, in part brought on by reduced imports, have played a role in restricting the movement of coffee for export. We expect exports to continue at an elevated level in July, however logistics continue strained. Shippers are waiting for up to 3 weeks to get containers, erratic shipment schedules and limited slots on vessels continue to be the norm. Additionally, transit times from Djibouti to Europe are much longer than they should be.

Exports in 2022 are currently keeping pace with last year’s exports, however the drop year-on-year recorded in April has not been clawed back, probably because of the difficult logistics more than anything else. It will be interesting to see if over the coming months the high 2021/22 crop predicted in the Djimmah and Lekempti areas is reflected in exports. Southern regions (Guji/Sidamo/Yirgacheffe) have a lower current crop vs 2020/21 but this should be compensated by the higher crop in the other regions: West, Southwest and North. The picture so far is that the pace of exports of the current crop is good (second only to the previous crop’s exports) and we expect this trend to continue.

Insecurity upcountry in parts of Guji and, in particular, in areas North and West of Addis Ababa are restricting the movement of coffee from the growing areas to mills for processing. Also wet weather continues to hamper the movement of coffee from the interior to Addis Ababa.

The UN has clearly demonstrated that the organisation believes the current stability and cessation of hostilities between Government forces and Tigrayan rebels by declaring its willinous to rebuild infrastructure in the North of the country destroyed by fighting, for the BBC’s take on things pls follow the link: https://www.bbc.com/news/world/africa?ns_mchannel=social&ns_source=twitter&ns_campaign=bbc_live&ns_linkname=62cd8f4cc0a04b7058298760%26UN%20to%20help%20rebuild%20Ethiopia%27s%20war-hit%20Tigray%20region%262022-07-12T15%3A19%3A57.392Z&ns_fee=0&pinned_post_locator=urn:asset:deecb9e4-3988-4c43-b50e-e866752c3f98&pinned_post_asset_id=62cd8f4cc0a04b7058298760&pinned_post_type=share

Birr 52.06 = USD 1

Have a good weekend.

The Coffee and Tea Authority (C&TA) launched a new Coffee Development Strategy. The 15 year program focuses on the following corner stone issues:

  • research
  • production-enhancing extension services
  • processing
  • value addition
  • marketing
  • sector strengthening

The coffee sector is responsible for 30% of Ethiopia foreign earnings and these are expected to grow from < USD 1 B in 2019 to between 3.5 and 4.5 B by 2033 and employing 2.7 Million people in production and other activities along the value chain. The aim is to export over 15 M bags by the mid 30’s, an ambitious target since current export volumes hover around 5 M bags.

Upcountry prices are not receding, Grade 5 offered by Agrabes at an equivalent FOB of around 230-240 usc/lb. There are many stale Sidamo 4 shorts that exporters have renegotiated as Lekempti 4; Wellega region coffees are struggling to reach Addis not due to insecurity but impassable roads, destroyed by heavy rainfall of the past few weeks. Export figures are expected to be announced next week. We are not expecting any major deviations from the recent trend.

Fuel prices have increased 25% at the pump (home use gaz increased 30%). There are more and more fears that inflation will take off once again in the coming weeks and months. Exporters foresee their costs also increasing as a result of energy price hikes.

We are expecting an early crop in Djimmah areas (Limu and Benchi Maji) due to recent weather favouring cherry ripening. Still a few weeks off before the new crop starts.

Meanwhile, Ethiopia and Sudan’s leaders have meet on the sidelines of a conference in Kenya and made progress in resolving the latest border skirmishes: https://www.bbc.com/news/world/africa?ns_mchannel=social&ns_source=twitter&ns_campaign=bbc_live&ns_linkname=62c5324bb893776ef334330e%26Ethiopia%20and%20Sudan%20leaders%20agree%20to%20solve%20border%20row%262022-07-06T08%3A11%3A07.134Z&ns_fee=0&pinned_post_locator=urn:asset:36c55e56-e9cc-4c44-9203-b703476603bb&pinned_post_asset_id=62c5324bb893776ef334330e&pinned_post_type=share

Birr 52.03 = USD 1

Have a good weekend.

The focus this week has been on securing containers and slots on vessels to ship coffee. The logistics situation yo-yo’s from just about bearable to big delays. At present it is taking 2 weeks to secure an empty container for stuffing. Slots on vessels are also difficult to come by, we never know on which vessels our coffees will ship!

In a bid to reduce dependency on imported Grain the Government has announced a plan to increase production of wheat to 2.4 M MT. 2021 Production was 1.4 M MT so this is an ambitious plan and it’s achievability was greeted with some scepticism by the US Dpt for Agriculture. Currently Ethiopia imports well over 1 M MT of grain with Ukraine wheat representing 27% of those imports; (Russia 15%).

Insecurity is ongoing in Amhara region (North of Addis Ababa), please follow the link for the BBC’s report: https://www.bbc.com/news/live/world-africa-61754470?ns_mchannel=social&ns_source=twitter&ns_campaign=bbc_live&ns_linkname=62bc06f7c5f5c122c9fc0ee0%26Bomb%20explosions%20rock%20Ethiopian%20city%262022-06-29T08%3A42%3A38.854Z&ns_fee=0&pinned_post_locator=urn:asset:a9408fd9-aa8c-472c-83a5-89d947f27976&pinned_post_asset_id=62bc06f7c5f5c122c9fc0ee0&pinned_post_type=share

The insecurity in some areas North of Addis has stopped the normal flow of coffee from some growing areas North of Addis (Wellega) so arrivals in Addis of Lekempti and Limu coffees have slowed in the past few days. We expect the flow to normalise as the army regains the upper hand in Amhara region.

On a more positive note, earlier this week the government announced a negotiating team in a bid to end the war in Tigray. We hope for a speedy negotiated settlement to the conflict.

Birr 52.00 = USD 1

Have a great weekend.