Origin Report - Ethiopia

March brings our attention back to Ethiopia in our origin report. The harvest is wrapping up, though it's a slightly delayed harvest this year compared to the average, and the country has started exporting both Washed and Natural coffees.

The World Market

C-Market Analysis

C Market candlestick chart, December-March
Source: Tradingview

In February the coffee futures market saw prices around $1.22 to open the month. Prices rallied 14.28% over two weeks, reaching $1.40. The market then dropped 9.2% to close the month, finding support at $1.28 which carried into the beginning of March. This rally in February marks the end of a period of low market volatility which began in November. During this period, prices ranged from $1.16 to $1.28, representing around 10% volatility rather than the 14% rise we saw in February. The month also contained the highest weekly market close since September 2017.

Global Coffee Industry Statistics and Analysis

The ICO reports a monthly average composite price increase of 3.1%, reaching a high of $1.2834 on February 25. Global coffee production is projected to increase 1.9% and demand is expected to increase 1.3%, resulting in a projected surplus of 5.27 million bags of coffee. Exports in the last four months total 41.88 million bags, showing an increase of 3.7% compared to the same period last year.

ICO composite price indicator, February 2019-February 2021
Source: ICO

At Origin

Harvest in Numbers and Statistics

National production levels in Ethiopia are estimated to be up 4.5% this year over the 2019/2020 harvest. This includes a growth of 1.1% in the Oromia region and 15.6% in the SNNPR. The average price for coffee in the country is also up nearly 22% compared to last year, which is likely contributed to by the daily minimum price implemented by the National Bank of Ethiopia last year as well as a higher C Market price compared to the same period of 2020.

Coronavirus Impact

Ethiopia reports a total of 171,210 COVID-19 cases, which represents approximately 150 cases per 100,000 inhabitants. This number may be artificially low due to limited testing availability in the country. Ethiopia received 2.2 million doses of the AstraZeneca vaccine on March 7 via the COVAX program and has begun vaccinating healthcare workers.

Future Outlook for Ally Coffee in Ethiopia

This year brings the continuation of both longstanding and newer relationships for us in Ethiopia. Rahel Mulat, Ally Coffee's Green Coffee Buyer in Ethiopia, was recently able to visit two of our newest producer partners—Boledu Coffee and METAD Coffee—in the Guji area. Tracon Trading, our main export partner in Ethiopia, has added additional drymill facilities in order to improve efficiency in the export process, which we anticipate will further streamline shipping schedules.

As the pandemic has made travel to Ethiopia impossible for the rest of our team this year, we are especially happy to be represented by Rahel in Ethiopia. During these times we've been able to see our offices at origin shine through continued contact with our producing and exporting partners. We're also glad that our on-site cupping lab made it possible to select coffees early in the season, helping to assure quality and traceability as coffees move from the washing stations to the warehouses in Addis Ababa.

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Happy roasting!

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