Cherry prices have increased a tad this week, we have heard that agrabis are paying up to 30 Birr per kg of cherry. This price remains still well below last year’s cherry prices which reached 3 times as much. Weather continues favourable for harvesting. Benchi Maji has seen some rain but this is not affecting processing. Liquidity remains tight with cash to finance the crop very much reduced viz a viz past seasons. Banks had their fingers burnt during the last couple of years and now are reluctant to support exporters.

Saudis continue to be the main buyers for Ethiopia coffee, most of the recent contract registrations are of UG quality which has a Minimum Registration Price of 1.33 USD/lb, and is therefore cheaper that Brazil. The lower price reflects the poor quality, however these shipments will insure that new crop shipment starting 2nd quarter 2024 will not be mixed with current crop lower quality coffees. Some volumes of washed coffee remain unsold however price/quality matrix not working for most buyers.

Security remains stable at present, most of the country seems to be peaceful.

The PM halted any speculation that tensions with Eritrea have increased in recent weeks: https://www.bbc.com/news/live/world-africa-67176382?ns_mchannel=social&ns_source=twitter&ns_campaign=bbc_live&ns_linkname=653a1bb4364b3f1612ec6815%26We%20will%20not%20invade%20any%20country%20-%20Ethiopia%20PM%262023-10-26T09%3A06%3A40.863Z&ns_fee=0&pinned_post_locator=urn:asset:75b2faec-8268-40f4-a36a-2b59d8db3dc4&pinned_post_asset_id=653a1bb4364b3f1612ec6815&pinned_post_type=share

On a more positive note an Ethiopian scientist working in the US has been awarded the prestigious National Medal of Science by President Biden: https://www.bbc.com/news/world-africa-67213442

Birr 55.48 = USD 1

Have a good weekend

Ethiopia coffee exports reported as 17 k MT bringing the 7 month March to September period to 160 k MT. We are currently 21 k MT below the 5 year average and given that this 23/24 March to Feb period should have been an up year the pace of shipments is very disappointing. We believe that the inventories are at elevated levels across the supply chain, and particularly high at farmer level as a consequence of prices having not met growers expectations. Furthermore, the Coffee & Tea Authority (C&TA) continues to maintain elevated Minimum Registration Prices, particularly for lower quality Grade 5 Naturals discouraging export sales to European markets.

Looking at the coming months we would normally expect shipment flow to decrease between Oct and Feb, given that weakness in the terminal market, poor quality of the coffee remaining in the country and general stubbornness of farmers and the C&TA we expect that exports will remain below potential. I would be surprised if the by the end of the 12 month period (Feb 24) shipments have reached 225 k MT.

Meanwhile harvesting and processing of the 23/24 crop continues, cherry prices remain below 25 Birr/kg (less than half the price paid last year) and given the lack of cash in the field we expect that they will remain contained. Limu areas will start to receive cherries second half October and the Southern regions will start in November.

As a big part of the export market is closed due to high minimum registration prices, local “mercato” coffee prices have decreased due to increased availability of coffee for local consumption. Additionally, crop quality is so poor that the proportion of undergrades is much higher.

Birr 55.35 = USD 1

Have a good weekend.