All

Ethiopian Electoral Board announced a postponement of the ballot originally being held on June 5th. No new date has been given since the oficial issues behind this decision, slow voter registration, delays in training polling station staff and supply of ballot papers have not been overcome! The extreme insecurity in different parts of the country are a very strong reason not to hold the ballot at present and until resolved will continue to hamper efforts to forge forward with planning for the ballot. In Tigray region all plans to hold the poll had already been abandoned, however instances of violence in other parts of Ethiopia continue to occur and impede normal daily life.

Meanwhile in Addis, coffee mills are full and working at capacity churning out coffee for Export; the usual logistical constraints, lack of containers, changing vessel schedules and equipment breakdowns hamper efforts to get coffee on vessels. Having said this, we continue to expect Export figures to remain at very high levels as a combination of attractive prices and a bumper crop “push” coffee on to vessels!

Overseas buyers appear to have an insatiable appetite, Ethiopian coffee inquiries do not stop coming and business continues to be concluded; Ethiopia Washed Coffees are increasingly competitive vs coffees from other Origins, as Ethiopian Naturals have been vs Brazil. At this rate, carry out stocks are likely to be small this year across the full quality spectrum.

Minimum registration prices for Washed coffees were set lower this week, a clear sign that the Coffee and Tea Authority (C&TA) is in misteep with both the NY Terminal Market and overseas demand for these coffees.

Now some good news, Covid cases and associated deaths continue to decline. Nearly 1.5 Million doses of the vaccine have been administered.

Birr 42.70 = USD 1

Have a nice weekend.

Hi

Another up week in NY leading to increased activity in Ethiopia. One does get the sense though, that there has been a lot of selling in the past few weeks and that shippers are now concerned with covering rather than selling at higher prices! The supply of coffee to ECX is down to a trickle, in the last 5 trading days only 1,600 MT were traded; we would have expected at least 4 times that figure; In the last 3 years during the same period between 6,000 and 7,000 MT were sold at ECX! With the ECX quickly disappearing as a source of coffee for shippers, vertical integration supply chains are being challenged by short shippers desperate to access coffee and agrabes that see opportunities to increase their returns daily. The relationships between shippers and agrabes are being stretched, shippers financed agrabes want “their” coffee and agrabes demand higher prices more reflective of a higher terminal market. Eventually things will sort themselves out, for now stakeholders haggle. Export Logistics have not improved, containers and slots on vessels are hard to come by. In spite of these challenges we are still expecting very strong export figures for the month of April.

Covid cases (and thankfully related deaths) continue to decline and a heavy military presence throughout the country if keeping the peace.

Birr 42.13 = USD 1

Have a good weekend.

Busy week with increased activity on the selling and buying side. As the terminal market returned to mid March levels differentials starting to look attractive once more. Quality so far is good, we have now seen the full quality spectrum from a range of shippers and all are meeting expectations. There is a lot of coffee activity in Addis, ECX is selling big volumes, shippers are milling at full capacity and the only issue that can dampen shipments are logistics. Some shipping lines do not have containers in Addis, others do not have slots on vessels and this is the weak link. So far things are holding up, March exports were high (as mentioned last week) but shippers are increasingly frustrated when they want to book or stuff as shipping lines do have enough equipment to meet demand.

The graph below maps the differential between the Minimum Registration Price for Lekempti 5 and KC from May last year to date, 1 year of weekly prices. On 2 occasions have the differentials dipped below -30, in July/August last year when NY rallied strongly and recently when NY traded between 135 and 140 in the end of February first half March.

With NY heading back through the 135 level, differentials once again are looking attractive if the terminal market continues to rally shippers will once again have a chance to get short. Equally buyers will be encouraged to buy as quality is good and shippers are performing well. Additionally with Brazil well sold and differentials firm Ethiopia Naturals are looking increasingly attractive.

Birr 42.02 = USD 1

Have a good weekend.

All

We have finally started to see the increased crop be reflected in Export volumes; March 21 exports exceed March 20 by 700 MT and reverse the picture of the past 10 months, where the monthly exports fell short of the corresponding month of the year before. We now expect this trend to continue in April and so on as the higher 20/21 crop is shipped.

News of the pandemic in East Africa continues to be very worrisome, the Tanzania President having succumbed to the disease, Kenya once again in lockdown and the numbers in Ethiopia reaching new highs. What the implication of souring covid cases will be, we do not know, however we are mindful that the initial postponement of the 2020 elections was due to the pandemic.

Forex 41.50

Have a good weekend.

We mentioned last week that container availability in Addis was a concern, disrupting planned shipments. This week, most of us have seen pictures of a huge 400 metre long container vessel stuck across the Suez Canal this week, blocking vessels from entering (in case you haven’t below is what it looks like). Shipping lines have been quick to inform customers of the situation and warning of delays. So here we go, expect delays, on top of the usual delays and most likely increased costs…

ECX Sales January to December were down from 240 k MT in 2019 to 171 k MT in 2020 a drop of nearly 30%; the graph below shows this broken down in Naturals and Washed coffees (for the 3 year 2018, 2019 and last year 2020):

Export figures support a drop in availability of coffee between 2019 and 2020; July to Feb (8 months) exports 19/20 = 167 k MT and 20/21 = 119 k MT a drop of nearly 30%. Of course we would need to consider variations in stocks and volumes traded outside ECX (Vertical Integration, Farm Exports and Coop Exports) however it is uncanny that the decrease in numbers of ECX sales and Exports are by the same proportion. If we take this extrapolation a little further we can state that the crop decreased by around 25-30% from 18/19 to 19/20 !?!

Forex Birr 41.06 = USD 1

Have a good weekend.