Following our trip to the Southern coffee producing regions of the country last week, this week we travelled to Djimmah to asses the harvest there. The picture in Djimmah is very similar to the South, washing stations working under capacity or simply closed. Production is generally good but the proportion of the crop that is being Washed is very much reduced, we expect that as much as 50% less coffee will be washed this year compared to what we would have expected in a “normal” year. Again we saw many Washing Stations having idle drying tables, only one fermentation tank being used out of a dozen, parchment very thinly spread on drying tables. Washing station owners are buying less cherries for washing and farmers are happy to sell less, processing the crop themselves at their homesteads and producing natural coffee to sell at a later date. Weather is favourable for the harvest, some rain at night and plenty of sunshine during the day. Overall, we expect good quality for both Washed (Grade 2) and Naturals (Grade 4 and 5), our concerns are very much skewed to the reduced Washed volumes being produced. The coming few weeks will be crucial, however we have little confidence that the production of Washed Coffees will increase substantially, currently our thinking is that more washing stations will stop receiving cherries for processing and that Washed Coffee availability will become increasingly compromised.
The peace negotiations are progressing well and the prospects of Ethiopia being welcomed back into the fold of Western Governments and subsequent resuming of finance agreements is increasing. This could result in an easing on the tight forex controls that were imposed on shippers during the conflict with Tigray rebels. Currently shippers are keeping around 30% of the USD they receive from export sales, however a return to the 70% level is increasingly voiced and even expected by some exporters. This would assist shippers in importing goods and reduce coffee export loses since the margins on imported goods continue to be very healthy.
Paradoxically, in West Oromia, instances of insecurity are not abating, for more on this please follow the link: https://www.bbc.com/news/live/world-africa-62845613?ns_mchannel=social&ns_source=twitter&ns_campaign=bbc_live&ns_linkname=639193d86967ef5dc539a172%26Ethiopia%20party%20calls%20for%20arming%20of%20Oromia%20civilians%262022-12-08T08%3A26%3A25.498Z&ns_fee=0&pinned_post_locator=urn:asset:8ace0c50-356a-4554-b838-4a5a70005377&pinned_post_asset_id=639193d86967ef5dc539a172&pinned_post_type=share
Birr 53.13 = USD 1
Have a good weekend.