Election Delay Creates Tension

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