With lots of coffee still unsold of the current crop and the next crop just round the corner shippers seem increasingly willing to sell, however minimum registration prices for Naturals remain high. While there are unshipped contracts registered at higher prices it is unlikely that the Coffee and Tea Authority will reduce Minimum Registration Prices fearing that overseas buyers will default on existing contracts to replace with cheaper purchases. As a consequence new contract registrations remain at a low level and exporter figures in the coming weeks and months will reflect this. The positive side arising from low levels of business at current prices is that it will push stakeholders to buy new crop cherries at more realistic levels than what was paid last year.

In lower lying areas of Teppi, Bebeka and Djimmah the harvest will start in early September. Generally, we are expecting an early crop this year as a consequence of above average rainfall during the maturation and ripening of the crop.

Shippers that have non performing bank loans have been warned that they could have face higher interest rates of as much as 22%, hopefully this will incentivise exporters to only purchase good quality coffees since poor quality is increasingly rejected by overseas buyers, becoming “sticky” and costing more to finance. In any event, given the extremely poor quality of the 22/23 crop, 23/24 can only be better, speeding up the flow from farm to ship.

Weather has become drier in the past few weeks, this is beneficial to lower moisture levels of current crop coffee stocks. Furthermore, as the new crop begins to be processed sunnier weather will be needed to dry parchment and naturals alike.

Ethiopia along with Five other countries has been invited to join the BRICS group, which aims to counter balance the weight of the G7 on the world stage.

Birr 55.02 = USD 1

Have a good weekend.

As always, when the terminal market falls out of bed, export registrations grind to a holt; this week was no exception, current Minimum Registration Prices as follows:

Internal prices are yet to reflect the lower international market prices, middlemen reluctant to accept lower Birr prices, particularly since they are well aware that shippers can since last week keep 40% of forex earnings (it was 20% before last week) allowing shippers to double in value their imports to sell locally. Long holders of Naturals are mostly farmers and Agrabes, shippers have little stock. Shippers are long Washed coffees which still have very high moisture levels and remain unsold. Prices and moisture levels will have to decease for these to start moving.

Banks have increased interest rates by approximately 2% this week.

Weather has improved, much more sunshine and no heavy rainfall in the last week. This weather will favour an early crop, we are expecting lowland harvesting to begging in early September.

Birr 54.96 = USD 1

Have a good weekend.

July exports were just above 21 k MT, the lowest export figure for the month of July in 6 years. At this rate the 22/23 crop year exports will be around 220 k MT the lowest export figure since 20/21. The good news is the following year 21/22 (March 21 to Feb 22) shipments were a record 310 k MT, so there is hope! If crop 22/23 is a write off looking ahead at the coming crop (23/24) , we are encouraged by the effects of heavy rainfall (which as been so detrimental to the current crop) and the prospect of an early crop will translate into good volumes; furthermore, if the rain stops during the harvest and post harvest period, quality will be good.

There is a noticeable change in destinations of exports, with Saudi and other Middle East destinations becoming more predominant at the expense of markets in the Far East, Europe and the USA. This, in our view, is a reflection of the qualities available this season having been negatively impacted by excessive moisture and humidity.

The Central bank has finally given in to exporter pressure and reversed the forex restrictions imposed during the conflict in Tigray; from now onwards shippers will be able to keep 40% of USD earned from coffee exporters to be used for payment of imported goods and services. This will allow shippers to lower USD export prices and the Government hopes increase export volumes. Previously exporters were only retaining 20% of USD export values. Additionally, the Black Market rate for USD should also drop.

Birr 54.89 = USD 1

Have a good weekend.

By all accounts stocks within Ethiopia remain very high, agrabes have stopped buying from farmers and exporters are not buying from agrabes, overseas buyers are totally absent so all trading is at a gridlock. Whereas there have been some small improvements in quality on the Lekempti coffees all other qualities are very poor. Washed coffees are still presenting high moisture content and Natural Djimmah coffee has so many unclean cups that the market for this coffee is restricted to the local market and a few less discerning overseas ones.

Weather is cold and drier than in previous weeks, however this is a more usual weather pattern than the months of high precipitation that we experienced from March to June. Net week we expect to have July shipment figures available. We are not expecting any changes to the slow pace of exports registered in the last few months. Imports of Ethiopian coffee to Japan for the first 5 months are under 40 K bags, the lowest imports from Ethiopia for over 10 years.

Birr 54.82 = USD 1

Have a good weekend.