As expected shipments in December tumbled (we were expecting this, so much so, that I had already decided on the headline for this post before I was informed of the figure); pressure has been mounting on shippers to export over the past few weeks, the Coffee and Tea Authority (C&TA) has seen export registrations stop and only a trickle of Bills of Lading filed. December 22 shipments are roughly half the Dec 21 shipments, and the lowest monthly shipments of the last 5 years, November shipments were also disappointing. January and February are unlikely to record much of an improvement; as reported in previous weeks the C & TA has been pressuring shippers to export 21/22 crop stocks, however there are increasing concerns that very few new crop shipments have not been registered for export so far. This week’s drop in terminal prices combined with current high minimum registration prices will result in few new registrations for the coming months. At some point (in the coming weeks) the C & TA will react to the lack of export registration by reducing minimum prices however, currently minimum prices for Grade 5 are around +20 FOB, which is completely unworkable… Southern Grade 2s are at around +150!
Terminal market prices continue to slide, however buyers are in no mood to adjust their buying differential price ideas, so trading is at a standstill. We believe that very little Ethiopia coffee has been traded outside of the internal supply chain, trade is not short to industry, Ethiopian shippers are not short to trade and have not pre-financed agrabes, therefore shippers remain uninvested in the 22/23 crop. Nearly all the crop remains in the hands of farmers and it will the farmers that will have to accept the price that the market will ultimately determine. Once Minimum Registration Prices reach a level that is “tradable” coffee will start to flow along the supply chain, until then we expect that the current standstill will continue.
High profile European visitors to Addis have been pushing for justice for civilians killed during teh 2 year conflict between Tigrayian forces and the government, the BBC reports: https://www.bbc.com/news/live/world-africa-64022866?ns_mchannel=social&ns_source=twitter&ns_campaign=bbc_live&ns_linkname=63c0d7a71e5a29791b50cc13%26France%2C%20Germany%20push%20for%20Ethiopia%20war%20crimes%20justice%262023-01-13T04%3A33%3A31.798Z&ns_fee=0&pinned_post_locator=urn:asset:7f794400-8638-4e20-b1c8-420ed800a51e&pinned_post_asset_id=63c0d7a71e5a29791b50cc13&pinned_post_type=share
Also on the conflict, the BBC reports the latest developments in the North of the country: https://www.bbc.com/news/live/world-africa-64022866?ns_mchannel=social&ns_source=twitter&ns_campaign=bbc_live&ns_linkname=63c105cd267de80d2199dafe%26Ethiopia%20says%20regional%20forces%20withdrawn%20from%20Tigray%262023-01-13T08%3A43%3A24.978Z&ns_fee=0&pinned_post_locator=urn:asset:c9d3e834-43ec-4421-bd75-e34d2f863a48&pinned_post_asset_id=63c105cd267de80d2199dafe&pinned_post_type=share
We continue to hear rumours of a potential local currency devaluation, however so far Birr remains stubbornly firm vs USD:
Birr 53.40 = USD 1
Have a good weekend.