Analysing Export data and destinations of Ethiopian Coffee Exports from the last 2 years, we can clearly see that the quality issues over the last few months have resulted in some destinations gaining and others losing market share. Saudi Arabia is now the top destination for Ethiopia, with Germany (previously top dog) dropping to second place. Interestingly, Saudi Arabia, UAE and Sudan are the countries among the top 10 destinations with increased volume. More traditional destinations such as Germany, Belgium and Japan have reduced imports drastically. Overall shipments decreased by 1 Million bags reflecting lower availability and the struggle to find a market for very poor quality current crop coffees.

Trading continued slow this week, there were 2 holidays on Wednesday and Thursday, furthermore terminal market dropped 11 cents week on week with Minimum Registration Prices decreasing much less, between 5 and 1 cent/lb. There will be few buyers for Grade 5 at plus differentials!

The harvest is progressing well, lower growing areas of Tepi, Benchi Maji and Bebeka are all harvesting. Limu will start within 2 weeks, cherry prices are approximately half the price paid last year. Washing stations owners had their fingers burnt last season, so sticking to prices between 20 and 25 birr/kg cherry. In addition less liquidity means there is less cash in the field, as a consequence competition is much lower even if farmers are resisting the lower prices. All this is good for Natural Grade 5 availability in 2024, crop is good and the proportion of Naturals will be big. Weather wise, there are no concerns.

Birr 55.20 = USD 1

Have a good weekend.

Shipments for August reached 26 k MT, which is the average for the last 5 years. However the 6 month exports March to September 2023 is still 19 K MT below the period’s average of 161,743 MT. We are now half way between the shipment period February to March, and it looks like we are going to struggle to reach 4 M bags for the the full year. Plenty of coffee remains upcountry, agrabes are still holding substantial volumes of parchment and farmers still hold above average dried cherry inventories; export volumes can only recover if these stocks are bought and exported by shippers. However, banks are reluctant to further finance non performing shippers and quality of the coffee that remains in country is generally poor. Prices in the internal market have dropped as there are more sellers than buyers at present. Paradoxically, Minimum Registration Prices for export contracts have remained unchanged for several weeks, so overseas buyers cannot even be tempted by low prices.

Ethiopia announced this week that the GERD dam has reached a new milestone:

Birr 54.14 = USD 1

Have a good weekend.

Retail Fuel prices were increased from 69 Birr/L to 75 Birr/L, a 12% increase in the price. However, inflation is at its lowest in 2 years and trending lower:

For the past 2 months inflation has been below 30% p.a. which we have not seen for 2 years and has been decreasing for 4 months on the trot.

Meanwhile there is little trading in Ethiopia, Minimum Registration Prices are too high and quality leaves a lot to me desired. We should have August shipment figures next week, again these are likely to disappoint.

Weather remains favourable for the harvest which is rapidly approaching.

Birr 55.14 = USD 1

Meanwhile the BBC reported on a confrontation in Tigray between protesters and authorities:

Have a good weekend.

With little else to discuss we look at what the Forex rate has been doing in recent months:

Having been very stable in the six months to February 2023, the last six months the Birr has lost 4% vs the greenback. In truth the local currency should be trading at around 100 to the USD if the Blackmarket rate is anything to go by; however, the Government is keen to keep a tight grip on the forex rate in an attempt to manage inflation which is still in the mid 30’s % P.A.

Weather has remained favourable to ripening of the crop on the trees. The harvest in the lower lying areas of Bebeka and Tepi will start imminently and generally thought to be an early crop this year. Farmers are also optimist on size of the crop, all we need now is favourable weather so that we can look forward to a good 2024!

Birr 55.10 = USD 1

Have a nice weekend.