There are increasing offers from Ethiopian shippers, the last flurry of trading in February (before the invasion of Ukraine and subsequent drop in terminals prices) was a while ago and shippers are returning to the market. However, offer levels remain at levels too high to generate much business, one feels that eventually lower prices (below 2.00 $/lb for grade 5 and 3.00 $/lb for grade 2) will start to be offered. Only 2 weeks ago grade 5 was offered at 2.15-2.20 and now offers are at 2.00-2.05. Meanwhile trading is limited, coffee that is processed and shipped is leaving room for more trading to occur so in the absence of a rally in NY origin prices will have to adjust.
Volumes traded through the ECX are small since the trend to sell coffee through private treaty (between Agrabes and Shippers) continues to gain traction. Shippers are still very long Washed parchment having been caught out by the drop in terminal market prices and the change in financial rules that reduced the proportion of USD that exporters can retain to purchase imports, squeezing their margins. Naturals are mostly in the hands of Agrabes and Farmers who will release their stocks to the market over the coming 8 months or so. The previous crop (20/21) shipped mostly between March 21 and Feb 22 was well exported depleting internal stocks so there is room for build up in these, slowing down the pace of internal trading and subsequent exports.
During the first quarter of the year the Birr has barely lost any value vs the greenback, 3% during the quarter; however the black market rate has been devaluing at a much more accelerated pace, having gone from 60 to 68, losing 13%. This discrepancy does not bode well for the value of the Birr going forward and with inflation at around 33% since the start of the year, any steeper Central bank devaluation will really be felt by the average person in the street.
The BBC seems hopeful that the fighting in the North of the country may be showing signs of receding https://www.bbc.com/news/world-africa-60943889 while at the same time Amnesty International and Human Rights Watch accuse Militia aligned with the Military and the Military itself of atrocities.https://www.bbc.com/news/world/africa?ns_mchannel=social&ns_source=twitter&ns_campaign=bbc_live&ns_linkname=624ebd63aea8d714b7409c19%26Tigray%20war%20crimes%20probe%20%27unhelpful%27%20-%20Ethiopia%262022-04-07T11%3A03%3A59.063Z&ns_fee=0&pinned_post_locator=urn:asset:53f08a82-a4ce-4689-870e-2bdfb43b94e4&pinned_post_asset_id=624ebd63aea8d714b7409c19&pinned_post_type=share
Birr 51.11 = USD 1
Have a good weekend