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Government forces have taken the main town in Tigray region, Mekelle, however the TPLF leadership have not been arrested which was the main justification for launching the offensive in Tigray. For now the region is stable and not as tense has in the previous month of November. The focus seems to have moved to aiding the displaced population that are in need of food and other basic necessities.

Exports continue to disappoint, during the 6 month May to October 2020 vs same period in 2019 volumes are down by 40 k MT or 25%. If you only look at the last 4 months, the drop is even greater at 34% between 2020 and 2019. This poor pace of shipments is expected to continue until the New Crop starts to be exported which could be early 2021 as the harvest was early and the weather conditions post-harvest favour parchment drying. Quality wise indications are that the crop is good and better than 19/20 quality. Reported cherry prices are still very high, as much as 27 Birr per kg in Yirgacheffe.

Birr 38.20 = USD 1

Have a good wkend.

All

Government forces appear to control most of Tigray region and are poised to take the regional capital having surrounded it this week. All attempts at mediations by African leaders have been rejected by the Central Government that feel they have the upper hand and can resolve this rebellion my military force alone. Tigray leaders for their part, facing arrest and imprisonment, must feel they have little to lose by prolonging the standoff. We can only hope that the confrontation has a swift and peaceful resolution. Meanwhile there are over 40,000 refugees in Sudan fleeing the conflict.

The rest of the country is peaceful and life continues more or less as normal. At ECX, prices for current crop Naturals remain elevated even if the volumes are reasonable, as a consequence of intense competition between shippers that still need to cover shorts. New Crop Sidamo is trading at 220 c/lb FOB equivalent and New Crop Limu not much lower at 210 c/lb FOB Equivalent. Meanwhile, cherry prices paid at washing stations in the South (Sidamo, Guji and Yirgacheffe) vary between 19 and 25 Birr and 20 and 25 Birr in Limu.

Birr 38.01 vs the greenback

Have a good weekend.

All

Let’s discuss 20/21 Crop Development.

Southern Region

Sidama: we are indeed expecting a good crop and harvesting started early October.

Yirgacheffe: as in Sidama we are expecting greatly improved crop in 20/21 vs 19/20, harvesting will start later in November/December.

Guji: Harvesting has also started here, and Vertical Integration is very intense in this region leading to increased price competition and substantial investments in Washing Stations and processing capacity in general.

South Western Region

In Kaffa, Bench Maji and Tepi farmers have been harvesting since September and the crop is down as much as 40% in some areas. The crop has been affected by CBD by as much as 8% in Tepi. In the South West this is an off-cycle year so a decline in production is expected.

Western Region

Jimma: The crop is expected a tad higher to 19/20, with some parts of the region slowing a substantial increase in production. There has been very little crop expansion in Jimma in the past 12 months.

Ilubablor: we are expecting a higher crop in 2020 vs 2019, the crop will only start to be picked in November.

Wellega: A sharp increase in production expected in 2020 vs 2019, as a consequence of good weather conditions and a more peaceful circumstances in this region. Harvesting will only commence in December and farmers are still holding some stocks from the 2019 crop.

Generally speaking there is little to no coffee in the hands of farmers and even agrabes are well sold as a consequence of the lower 19/20 harvest and good prices at ECX.

Current cherry prices are very high, a reflection of internal competition, as follows (kg cherry):

Sidamo :  18 to 20 Birr

Guji:  25 Birr

Limu: 21 Birr

Forex rate: 37.34 Birr to the USD

Have a good weekend!