Much less activity this week as the terminal market moved lower having lost a chunk of the gains made a couple of weeks’ ago. Focus is turning to the upcoming crop and it’s potential. The coming crop in the South (Yirgacheffe and Sidamo) is looking larger than the 21/22 crop which is good news, we are bracing ourselves for a difficult 6 month between now and the new crop being available for shipment. The current crop (particularly in Sidamo) has been disappointing both in terms of volume and quality. Other regions are also expected to yield larger volumes in 22/23, Limu, Benchi Maji and Wellega are all looking good to produce larger volumes in 22/23. Weather wise, the wet and cold season is still ongoing, as a consequence coffee moisture levels are higher than expected.
There were reports this week that some overseas buyers, in disputes with shippers, were withholding payments for shipments made on a Cash Against Documents (in trust) basis. The aggrieved exporters have brought their cases to the Coffee & Tea Authority (CTA) and the regulator has decreed that the buyers in question are suspended from trading with Ethiopia Exporters. These occurrences could have wider reaching consequences for how coffee is traded in the future, specifically what payment terms will be acceptable. In recent years payment terms have been relaxed but if the Government feels that this has negative consequences for local businesses and the Ethiopian coffee sector, payment terms could revert to 100% Letter of Credit, as they were previously.
BBC reports on ethnic attacks in North and Western ethiopia: https://www.bbc.com/news/world/africa?ns_mchannel=social&ns_source=twitter&ns_campaign=bbc_live&ns_linkname=631216c39ec49f77eefbcc99%26Dozens%20killed%20in%20western%20Ethiopia%20-%20witnesses%262022-09-02T17%3A07%3A36.060Z&ns_fee=0&pinned_post_locator=urn:asset:5b0265f6-16f3-471e-b130-139785251851&pinned_post_asset_id=631216c39ec49f77eefbcc99&pinned_post_type=share
Birr 52.50 = USD 1
Have a good weekend