Headwinds

Shippers and agrabes have not been having it easy in recent weeks. Shippers sold at minimum registration prices end of February (when NY was above 190), so by now you would expect Grade 5 coffees to be moving in volume to Addis, however shippers are struggling to access coffee. Why? Well, firstly, agrabes are holding little stocks and are proud sellers since they bought at high prices and need to maximise returns to allow cash generated from sales to be used to buy more coffee from farmers. Farmers are asking for high prices since inflation is high and the value of cash diminishes rapidly. Additionally, transport costs are high and getting higher. Meanwhile the government is tightening controls on movement of coffee to Addis and other centres in an attempt to restrict coffee being diverted to the internal market. There is also uncertainty around a 15% tax of coffee,this idea was floated by officials a couple of weeks ago. Trade finance by exporters and banks has all but stopped so there is a liquidity problem upcountry. Lastly the weather is very wet, this stops final drying of stored coffee and damages the roads, increasing the risks to coffee while being transported. It is not easy at the moment…

We have finally seen an increase in shipments following the lowest 2 months of shipments in recent years. February recorded 16.6 K MT of exports bringing the 12 month period ending Feb 23 to a total of 261 k MT, not as high as it could have been given production in 21/22, however, at least the decline in shipments has ended. The decline in shipments 22/23 vs 21/22 is 50 K MT, however 21/22 still manage to post a number just above the 5 year average.

Birr 53.82 = USD 1

Have a good weekend.