Having sold big volumes into the recent rally shippers are concerned that they cannot cover their more immediate shipments; it is a fact that volumes arriving at the ECX are disappointing and well below what shippers would normally expect to see this time of the year; a combination of weather and economic policy are behind this situation. Firstly,  the unusually wet conditions that had us concerned in November delayed the harvesting and consequently the normal flow to ECX; secondly the government appears to be making no secret of pursuing a strategy of steadily devaluing the  Birr, to reach the black market rate this would require a further devaluation of approx. 8 Birr (Black market rate around 40 birr to the USD), the Birr lost 2 Birr vs USD in the last 2 months. If you are an agrabe it would make sense to delay the sale of coffee in Birr for as long as possible to maximise the Birr price. In this very volatile terminal market, time will tell if this will pay off, for now it would seem that local traders are in the driving seat.

Birr lost 2.5% vs the USD since the beginning of December and 7.5% since the beginning of November.

Weather continues to benefit picking and processing, coffee quality concerns related to humid conditions should not materialise.

Prices for cherry are still very firm in the Southern regions, washing stations are currently paying above 20 Birr/kg cherry in Guji and Yrgacheffe.

Summary of Coffee Ithaka Jimma and Guji tour from 2nd to 13th December

The team travelled extensively to Guji and Jimma coffee zones, in both cases with exporters’ representatives, driving to Guji, passing by Yirgacheffe and Sidamo. In Jimma zone we drove through the coffee producing areas of Limu Kosa and Limu Seqa, among others. We were glad to not have seen any sign of political or socio-economic unrest in both the Southern and Western regions.

Crop Development and Quality

In Guji, coffee cherries are ripe, well-developed and show no signs of disease. Likewise the coffee trees are looking healthy. Crop development and processing:

Naturals: in the last 2 weeks of November, untimely rains fell in Guji zone, however sundried coffee showed no signs of mould damage – we assume farmers and sundried station managers are doing their part by covering during rainy episodes. Same thing for Jimma zone.

Washed: during our trip to Guji the skies were clear. Some parchment was cracked open due to midday sun exposure, which might affect washed coffee quality. In Jimma the weather was hot and the sun was strong, which caused all parchment to crack and to dry in 7 days rather than the ideal 21 days.

For Sidamo region we maintain our 22% reduction in the crop (vs 18/19 crop) published in our October Crop Report, however in Guji, farmers and processing station owners are confident that the 2019/20 crop might be as good as last year’s, despite being an off-year.

In Guji harvesting started 4 weeks ago (mid-Nov) and around 30-35% of the crop is expected to have been harvested to date. In the West, 75% of the Jimma/Limu crop has been  harvested.

Guji cherry Prices

During the team’s trip in Guji coffee zone, 1st week Dec, fresh cherry in Bule Hora and Kercha (West Guji) was being sold between 17 and 20 ETB/kg, giving an FOB Djibouti equivalent of 200 to 235 US ct/lb

by Charles Seara Cardoso

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