It is AFCA conference week again, after a 3 year hiatus the East African Coffee Conference is being held in Kigali, great to see so many familiar faces after such a long time!

Normally by mid-February Addis Ababa is a hype of activity with mills full of new crop parchment and the first arrivals of natural coffee “fighting” for warehouse space and milling slots. This year the picture could not be more different, warehouses have very little coffee, if there is any at all it is the remaining old crop that will be shipped in the next few weeks. Export registrations continue at very low levels, not even the recent 40 usc/lb rally has been enough to get new crop trading. Something will have to give in the coming months to allow new crop to start flowing:

1. Either the currency devalues

2. The terminal market rallies higher

3. Long holders “throw in the towel”

The other option is for buyers to pay up and accept “never seen before” differential prices… It is difficult to see buyers paying +100 to +150 for Ethiopia Grade 2 coffees while other East African milds from Kenya, Tanzania, Rwanda, Burundi and Uganda are quoted at the AFCA conference at prices between +40 and +65 FOB. Next conference is in Addis Ababa, in a year’s time, it will be interesting to analyse how the 22/23 crop was marketed and what had to give to allow coffee to flow to the export market, my guess is that it will be a combination of the 3 points made above; we could also see some build up of stocks, a normal outcome when downstream players are unhappy with prices.

Birr 53.64 = USD 1

Have a good weekend.

Another month with exports below 10 K MT, only the second time this has happened in the last 5 years, first in December 2022 and now January 2023. Shippers have not been able to find buyers at asking prices or minimum registration prices. Hopefully February and March will be better, the recent rally in NY allowed for some sales, mostly of old crop. However, a more stable NY exchange this week took the excitement out of the the Ethiopia market. With little older coffee remaining unsold focus is turning to New Crop however buyers are looking for more attractive differentials than what can be achieved at present.

March to January (11 months) 22/23 stand at 244 K MT vs 290 same period 21/22, 16% lower. The prospects of shipments improving in the coming months will very much depend on pricing, shippers and the Ethiopian authorities need to adjust expectations to the market reality, otherwise below average exports will continue for longer.

In other news, voters in the South are casting ballots to decide if there is to be a new Region, for more on this follow the link:

Birr 53.56 = USD 1

Have a good weekend.

By all accounts the January export figure is dismal, however we have to wait for the Ethiopian calendar to catch up with “ours” to get an official number. The recent rally in NY has helped shippers sell any remaining stocks, just in time before focus turns to New Crop business. However, we expect the export market to remain quiet for the coming weeks until we start to get more significant internal sell pressure for New Crop coffees. Currently, warehouses in Addis are empty of stock, middlemen are struggling to sell since exporters cannot find interest from overseas buyers at the asking prices. Demand will surface when Minimum Registration Prices start to reflect more realistic differentials; we saw this happen for prices for past crop coffees and we are expecting this to happen for New Crop coffees – shipment April/May onwards.

There are rumours in Addis that the Government is planning to introduce a new Export Tax of 15%. So far these are only rumours, however we would not be surprised if this happens given the pressures on Government to stabilise the economy now that the country has returned to peace and the focus is on reconstruction.

Birr 53.52 = USD 1

Have a good weekend.