Minimum registration prices remained unchanged, in NY prices came off so it is not surprising that business is slow. Shippers want to do business but asking prices based on upcountry prices are completely untradable. Export Contract Registrations for commercial qualities must be close to zero this week.

Something will have to give and it is looking increasingly unlikely that the terminal market will come to the rescue!

It is unlikely that buyers would be paying these prices so exports will remain low; indeed this is a very slow start to the year, export figures for March will be available soon and are surely to disappoint the Coffee & Tea Authority. The body that oversees the coffee industry has been on a campaign to get shippers to export but with so little coffee arriving in Addis there must some very concerned officials in Addis these days.

Weather continues to be very wet in Addis and some of the coffee growing areas such Wellega (Lekempti).

Birr 53.90 = USD 1

Have a good weekend.

Very little business concluded this week, offers are plenty but prices are untradable. Minimum Registration Prices were put up this week, quite unexpectedly, so with the terminal market losing ground during the last few days, prices are unworkable.

Meanwhile, although there is some flow of coffee from the growing areas to Addis the volume is still much less than expected for this time of the year. Some stakeholders blame the wet and rainy weather for slowing down the transportation of coffee from the interior to Addis, however we feel that the volumes moving down the value chain are very much reduced compared to previous seasons. Farmers are not releasing coffee, prices are perceived as low and the value of cash not attractive enough for farmers to exchange coffee for Birr. Sales registrations remain low and forbear below potential exports in the coming few weeks.

Eventually the flow of coffee from the growing regions to Addis (and on to the port in Djibouti) will have to improve, however for now everything is very delayed.

It seems that this week the Prime Minister instructed the Coffee & Tea Authority to work on a plan that will lead to opening up the coffee business to foreign entities. We shall have to monitor this process carefully, the wheels of change turn slowly in Ethiopia but if they eventually change direction, we will all be travelling down a very different road!

Birr 53.87 = USD 1

Have good weekend.

Shippers and agrabes have not been having it easy in recent weeks. Shippers sold at minimum registration prices end of February (when NY was above 190), so by now you would expect Grade 5 coffees to be moving in volume to Addis, however shippers are struggling to access coffee. Why? Well, firstly, agrabes are holding little stocks and are proud sellers since they bought at high prices and need to maximise returns to allow cash generated from sales to be used to buy more coffee from farmers. Farmers are asking for high prices since inflation is high and the value of cash diminishes rapidly. Additionally, transport costs are high and getting higher. Meanwhile the government is tightening controls on movement of coffee to Addis and other centres in an attempt to restrict coffee being diverted to the internal market. There is also uncertainty around a 15% tax of coffee,this idea was floated by officials a couple of weeks ago. Trade finance by exporters and banks has all but stopped so there is a liquidity problem upcountry. Lastly the weather is very wet, this stops final drying of stored coffee and damages the roads, increasing the risks to coffee while being transported. It is not easy at the moment…

We have finally seen an increase in shipments following the lowest 2 months of shipments in recent years. February recorded 16.6 K MT of exports bringing the 12 month period ending Feb 23 to a total of 261 k MT, not as high as it could have been given production in 21/22, however, at least the decline in shipments has ended. The decline in shipments 22/23 vs 21/22 is 50 K MT, however 21/22 still manage to post a number just above the 5 year average.

Birr 53.82 = USD 1

Have a good weekend.

The Coffee & Tea Authority lowered Minimum Registration Prices this week to try to keep the momentum going however, last few days NY terminal levels declined further so registrations will lag and slowdown as a consequence. There are plenty of offers from shippers however these are not at attractive price levels. Quality of shippers Washed coffee stocks is currently very poor, mixed with old crop it is very disappointing. Naturals are yet to arrive in Addis in any sort of volume, the disparity between price expectations from overseas buyers and local farmers/agrabes is still substantial. We expect that over the coming weeks increasing volumes of Naturals will arrive as shippers ready shipments to fulfill commitments established when NY ventured into the 190’s a couple of weeks ago.

Now to the rumours…the Government is unhappy with low export registrations over the last few months, by all accounts February 23 exports will again be disappointing (around 10 k MT). To boost coffee export revenues, rumour has it, that the Government is considering allowing Foreign entities to become exporters… if this were to happen it would be a huge shift in Government policy and would have far reaching consequences for the Ethiopian coffee industry. The Coffee & Tea Authority is leading this process and is working on legislation that would make this possible. Timeline would be at least 1 year for this to come to fruition, probably much longer. Watch this space…

Birr 53.79 = USD 1

Have a good weekend.

Last week the terminal market helped shippers get sales registered, Grade 5 traded in volume as the market hovered the 190 c/lb level and minimum prices were kept just under 170. The washed coffee picture remains still very difficult, minimum registration prices for Grade 2 from the South (Sidamo, Guji and Yirgacheffe) are between 290-300 c/lb and there appears to be little roaster appetite to buy at prices greater than + 100. Since trade shorts are very small it would seem that that the standoff between sellers and buyers will continue for a little longer. This week the NY market took a bit of a breather retracing a fair chunk of last week’s rally and trading activity in Ethiopia also stopped as shippers will now busy themselves with fulfilling last week’s sales. Thursday was a holiday in Ethiopia which also helped slow business activity this week!

We are seeing some shippers offering last crop washed coffee stocks as current crop, as shippers try to offload sticky inventory as the new marketing season gets well and truly underway. Given this year’s lower washed coffee production we believe that these stocks will eventually get shipped however we caution buyers. We expect that new crop naturals will start to flow to Addis in much larger quantities in the coming weeks as shippers now have commitments to meet. As we see it shipments in February have not been remarkable, we expect exports figures to be available next week. We still believe that carry over stocks from the 21/22 crop to be substantial as all stakeholders got caught out by the dramatic drop in prices since October 2022 to January this year.

For now government policy regarding minimum registration prices, devaluation and the proportion of USD that shippers are permitted to retain for own imports has not changed and it has been the terminal market that has come to the rescue! However 50 cent upwards moves in matter of a handful of weeks is not a normal occurrence… how many more can we expect in the coming months?

Birr 53.75 = USD 1

Have a good weekend.