Exports for October topped 20 K MT; Shippers started “throwing in the towel” under pressure from Coffee & Tea Authority penalties, seeing the New Crop on the trees ready to be picked and steady prices. November shipments should continue this recent improved performance aided by the recent buoyant NY terminal market which as come just in time to help clear warehouses waiting to receive New Crop coffee. These strong October shipment figures followed on from very robust September shipments, however 22/23 exports are lagging behind expectations and even if the coming months register above average shipments by the time New Crop coffees come to market (March 2024) shipments will still be lower than expected.

Washing stations in the South have started receiving cherries, prices are 25 Birr/kg. It really seems that thus far stakeholders have taken heed of last years pricing chaos and have become much more disciplined (last year cherry prices in the South were between twice and 3 times current prices). There is also much less cash available in the field for cherry buying, leading to less competition which in the past has fueled pricing hikes.

Currently there is not much interest for new crop offers, it appears that roasters are waiting for lower prices and/or clarity on demand. Trade buyers are put off by the lack of carry in the market and high (even if stable) interest rates.

In other news, one year on from the peace deal between Tigray rebels and the Government, the BBC reports on the situation in the North of the country: https://www.bbc.com/news/av/world-africa-67290495

Birr 55.63 = USD 1

Have a good weekend.

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.

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.