The weather has changed for the better in Ethiopia in recent days. It is drier and these conditions are more favourable for ripening and drying after picking. Additionally, roads that were impassable for weeks because of wet weather conditions  have now become operational; we expect more coffee to move from upcountry to ECX warehouses, increasing the volumes available to exporters. Export business continues subdued and below last year’s volumes and we believe that this trend will continue for the remainder of the crop. Our initial thoughts on the size of the 2020/21 Djimmah Crop are positive, conditions have been favourable and we are expecting a good crop, higher than last year and, importantly, better quality.

Saudi Arabia which is the single largest buyer of Naturals from Ethiopia (Grades 4 and 5) have decreed that the maximum allowable number of defects that can be imported to Saudi is 26 defects, i.e. grade 3 quality; if this regulation is enforced it would have a big impact on the Ethiopia Natural Supply Chain, since the competition for better quality coffees would intensify. Furthermore much more raw coffee would be needed to achieve Grade 3 quality squeezing the price for grade 4 and 5 coffees, particularly in a year where quality is below average. Some exporters have told us that a few Saudi buyers have requested contracts to be changed from Grade 4 and 5 to 3. The price difference between a grade 3 and a grade 4 is much more significant than a 4 to a 5. It remains to be seen if this regulation is enforced in the coming weeks and months.

Daily positive Covid tests are just under 1,000 for the past few days. The total number of positive cases has reached 82 k.

Forex 36.90 to the USD

Have a good weekend.

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