We have received some data regarding shipments for the 10 month period up to the beginning of May 2020, which makes for interesting reading. Total exports reached 219 K MT (173 K MT same period 18/19) so 27% up on the previous year. If shipments continue at this pace in May and June, the 12 month period will be the highest export figure for Ethiopia ever and will surely exceed 4 M bags. We do not have the split between crops but the majority of these exports will be from the 18/19 crop rather than the current crop. Although the pace of sales at ECX has picked up a little during the month of May particularly for Lekempti, ECX sales remain very much behind the pace of sales of last year as in evident below tables that show ECX sales as of 29th May for 2020, 2019 and 2018:

Washed Coffee

				19-20 CHANGE
MT @ 29 MAY	2018	2019	2020	MT	%
LIMU/OTHER WASHED	15,850	11,812	14,313	2,501	21%
YIRGACHEFFE	4,112	4,821	2,652	–       2,169	-45%
SIDAMO/GUJI	16,794	16,528	6,961	–       9,567	-58%
Total Washed	36,756	33,161	23,926	–       9,235	-28%

Natural Coffee

				19-20 CHANGE
MT @ 29 MAY	2018	2019	2020	MT	%
SIDAMO	10,146	13,893	5,913	–       7,980	-57%
LEKEMPTI	23,338	23,836	20,462	–       3,374	-14%
DJIMMAH	26,710	18,909	23,786	4,877	26%
OTHER NATURAL	25,639	26,466	24,053	–       2,413	-9%
Total Natural	85,833	83,104	74,214	–       8,890	-11%

We expect that the crop is lower in the Southern Region and these ECX figures reflect that, however, we also believe that a much larger proportion of the crop from this region has been bought through vertical integration so will get exported having by-passed the Exchange.

Birr 34.24 to the USD

by Charles Seara Cardoso

Turbulent times for the government, internally many political groups are unhappy with a potential delay to the elections due to Covid 19;  on the external front Sudan and Egypt have both voiced their discontent with the recent statement put out by the administration that the Nile damn will start to be filled in a few weeks’ time. The pandemic continues to progress in Ethiopia however at a seemingly very much reduced pace when compared to other countries. The authorities are focusing their attention on a few clusters in a few areas of the country. Shipments continue to flow out of Addis without any major disruptions, there are a few minor problems at the port, however by and large, operations are normal. Business continues slow, buyers still not fully engaged in forward shipments, interest continues to be focus on nearby deliveries.

Minimum registration prices dropped this week having been put up last week, the pattern is very much a zigzag, however we believe that the volume of registrations this week remained low so it will be interesting to see whether the minimum prices are put up for next week.

Below we take a broad view of ECX sales over the last 3 years, New Crop coffee up to 8^th May. The sales of the 19/20 crop are noticeably below the last 2 years, the reasons are mostly due to the reductions in both Natural and Washed from the Southern coffee producing areas Sidamo, Guji and yrgacheffe not coming up for sale at the exchange. We know that the crop is down in the South however not down by the approx. 50% less volume coming to ECX. Vertical Integration is obviously attracting decent volumes away from the Exchange, however we believe that we shall still see some volumes from the South coming to the ECX, if for no other reason that the crop was delayed this season.

Birr is at 33.80 to the USD, the devaluation vs the greenback has been a fairly constant 0.3% per week since the start of 2020.

by Charles Seara Cardoso

Anther slow week on every front. Preparing coffee for shipment is slow or slower than usual! Enquiries from overseas are few and far between as our buyers assess the longer terms of the pandemic on their future needs. Meanwhile at the ECX prices increased this week as shippers cover shorts established before the recent drop in the terminal market.

Below we analyse the volumes traded at ECX up to the 3^rd of April. We hope to update these in the coming days, however the patterns are set. Southern coffees continue to be offered in much reduced volumes to what had been traded at the same time in the past 2 years. Meanwhile the volumes of Limu are very healthy and undoubtably will be getting mixed into Sidamo shipments.

Natural coffees offers are also very much reduced from Sidamo, whereas Lekempti coffee volumes picked up to gain the lost ground that we saw at the start of the season.

This reduction in availability of coffee from the Southern coffee growing areas will bring some problems to shippers and traders alike in the coming months.

The birr has not lost much ground to the greenback this week currently trading at 33.54

Have a good weekend and stay safe.

by Charles Seara Cardoso

We are all currently operating in a different environment than what we are used to. Courier companies and postal services are taking longer to get our documents and samples to their destinations; customs officers appear to be more fastidious than usual and banks are taking much longer than usual to execute transfers and LCs… all these issues are probably a direct consequence of the social distancing measures implemented by different organisations around the globe trying to follow governmental directives. Similarly at origin we are experiencing delayed shipments. The reasons for these delays are:

• Shipping Lines have reduced the number of vessels calling at East African ports therefore the number of spaces available are less and containers are getting left on quays not being loaded. Furthermore, admin staff shortages at shipping lines means that we are getting less timely information regarding bookings and container positioning; some lines have also experienced container shortages due to big changes in trade flows resulting from the pandemic; some have even had software problems.
• Warehouses and Mills are working with reduced staff, resulting in lower processing and loading capacity. Furthermore, ECX has reduced the number of days shippers can access the trading floor causing a bottleneck on the flow from agrabe to shipper.
• Many banks are experiencing a liquidity crisis and as a consequence are restricting credit to shippers that have contracts and opened LCs, stopping them from buying coffee to cover their commitments. 

Last week the Ethiopian Government had decreed a State of Emergency, on Saturday we learned some more details:

• The decree has banned gatherings of more than four people unless there is an absolute necessity, in which case permits need to be acquired from authorities.
• Handshakes are also not allowed.
• People now also have to wear masks in public,
• Public transport operators have to cut their seat occupancy by half, while hotels and restaurants are not allowed to have more than three customers on a table.
• Landlords cannot evict tenants and neither can they increase rent.
• Employers are prohibited from laying off workers on the grounds that business has slowed down.

In Addis day-to-day life seems unbothered by these announcements, mask usage and social distancing is not being implemented, and some places like markets remain as crowded as ever.

Meanwhile, trading at ECX and at FOB level continues, albeit on a smaller scale than we would have expected under normal conditions. Minimum registration prices are currently much more in line with expectations as the Coffee & Tea Authority appears to be listening to stakeholders, although some prices still baffle, why is the minimum price for Lekempti lower than Djimmah?

The birr has not been allowed to devalue at the same accelerated pace as other origin currencies, although the pace increased in March/April vs February/January, so far in 2020, the local currency has been allowed to lose a little over 4% to the greenback.

by Charles Seara Cardoso

We have been rather keen to get coffee on boats in the past 2 weeks. However, we are being frustrated by shipping lines closing containers out because they have no space even when containers are positioned for shipment. Normally this is a busy time of the year for Ethiopia shipments and the current pandemic is making timely shipments more of the essence!

The Ethiopia Government has asked it’s employees to work from home as much as possible and encouraged employees of private companies to follow suit. Concurrently the Ethiopia Government has been keen to stress that Export industries have to continue operating, therefore warehouses, mills and transporters are to operate as much as possible, normally. There are restrictions on the movement of private individuals across the borders with Sudan and Djibouti but not for import or export of goods.

Other East African countries have started to also implement social distancing measures with a view to slow the spread of the pandemic among the population. Uganda has taken the most draconian measures of all coffee exporting countries in the East Africa region resulting in stopping the export of coffee for at least 2 weeks. Fortunately, neither Ethiopia nor Djibouti Governments have intervened to stop shipments, however, we see Governments around the world taking unprecedented measures restricting economic activity so we must be mindful that this could happen in the countries where we operate.

We continue to not have any major issues with export logistics or export documentation, however, the quality of pre-shipment samples has been an issue that has slowed shipments. We are getting very frustrated with shippers, particularly with the quality of pre-shipment samples of Naturals (Djimmah 5 and Lekempti 5); currently, the ECX has big volumes coming through the trading floor and prices have decreased considerably in the last 5 weeks from 1,270 to 1,050 Birr per Ferasula for UIB6 (Illubabor Grade 6) the main component of Djimmah 5, a drop of 17% in price in Birr, nearly 20% in USD; below we convert the current ECX price for UIB6 to Djimmah 5 FOB Djibouti.

ECX Price in BIRR per FERASULA ( =17kg )	1,050.00
Exporter Costs (Birr per KG Green Coffee)
Transporting coffee from upcountry to Addis (Birr 80 per 100kg)	0.80
Processing cost (Birr 1,045 per MT Green Coffee)	1.05
Cost of bags for local storage (Birr 55 per 60 Kg)	0.92
Cost of bags for export (Birr 65 per 60kg)	1.08
ECX commission charges  @ 0.49%	0.30
Cost of insurance (Birr 1200 per 19200 kg)	0.06
Weight loss 1%	0.62
Transit cost (Birr 15,000 per container)
=>cost of transit for shipping &stuffing	0.78
Transporting coffee to Djibouti port
(between 55-90 Birr per 100 kg, average Birr 65 per 100 kg	0.65
Cost of financing
financing 3 months per kg	1.96
(Financing at 11.5% p.a.)
Rejects 5% sold in the local market
Value of the Rejects in local market	-3.53
(Reject price on average Birr 1200 per Frs* of green coffee)
FOB Djibouti in Birr/kg (including 5% Reject)	70.20
FOB Djbouti in USD/lb	0.98
Exchange rate Birr 32.5 to 1 USD

NBE Forex 3rd April 2020: Birr 32.88 = USD 1

by Charles Seara Cardoso