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Origin Report - Ethiopia

Our September Origin Report looks at Ethiopia, as this year’s coffee shipments have arrived at their destination warehouses and the beginning of the next harvest nears for farms at lower elevations. Read on for a look at the C Market, the International Coffee Organization’s Monthly Market Report, and the latest news from our office in Addis Ababa.

The World Market

C-Market Analysis

C Market Candlestick ChartSource: Tradingview

The coffee futures market has maintained its relatively high levels which began in the second half of July 2021. After opening the month of August at $1.79 the market gained fairly steadily, reaching over the $2.00/lb mark on August 30th and closing the month at $1.959. However, the market failed to sustain these prices in early September and prices sit at $1.87/lb at the time of writing (September 13). Despite this downward trend, September has seen the market continue to fluctuate within the $1.80-2.00 range.

 

Global Coffee Industry Statistics

ICO Daily Composite Price Indicator ChartSource: ICO Coffee Market Report, July 2021

  • Concerns over a smaller supply, adverse conditions due to global climate change in producing countries, and increasing freight costs continue to be the driving force of the market.
  • The ICO Composite indicator marks its tenth consecutive month of price increases, reaching $1.6014/lb, which is a 5.2% increase over July. Additionally, this is a price increase of 51.3% since the start of the coffee year in October 2020.
  • Global coffee exports this month total 10.7 million 60 kg bags, a 1.7% increase compared to the same period last year.
  • World consumption for the year is projected to increase 1.9% from coffee year 2019/20 to 167.01 million 60 kg bags, which is still 0.3% less than the pre-pandemic levels.
  • Total global production in coffee year 2020/21 is projected to be 169.64 million bags, representing a 0.4% increase on the previous year. However, a substantial reduction in world production is expected in 2021/22 following some important origins experiencing climate-related shocks.

      Read the ICO’s full August 2021 report here.

      Young coffee cherries ripening
      Young coffee cherries ripening in Ethiopia

      At Origin

      Ethiopia Harvest Report

      According to the Ethiopian Coffee and Tea Authority (ECTA), total exports of Ethiopian coffee during the country’s fiscal year totaled 4.1 million 60 kg bags with a value of $906 million, the largest total value recorded in Ethiopia. The coming harvest is projected to yield 4.7 million exported bags, valued at over one billion US dollars. Coffee production in Ethiopia has grown steadily over the past three years, with the country’s exports throughout July this year exceeding the ECTA’s estimates by 46%. Total coffee production for coffee year 2021/22 is forecasted to reach 7.62 million bags given suitable weather conditions and adequate rain.

      Multiple factors contributed to a recent increase in the price of Ethiopia’s coffee exports, with the main drivers being the high international price of coffee alongside new reforms in Ethiopia’s coffee policy. These new reforms include greater vertical integration of the supply chain and a new directive imposed January 2020 called “Export Coffee Contract Administration” that fixes a minimum export price based on the global weighted average. This is in addition to changes implemented in 2019, through which the ECTA and the Ethiopian Commodities Exchange (ECX) have streamlined the coffee value chain so that coffee farmers with a minimum of two hectares of production, commercial producers, and coffee processors may now export coffee directly to the international market.

      The coming harvest season brings prospects of continued price increases for red cherries. Average cherry prices are estimated to increase 30% per kilo compared to the beginning of the last harvest. This continued price increase is due to the rise in the C Market, and the expectation of a rising demand for Ethiopian coffee.

      Ally Coffee in Ethiopia

      2020/21 was a successful year for Rahel Mulat and the Ally Coffee office she runs in Addis Ababa, Ethiopia. Through her presence we are able to maintain close relationships with our partners in the country, cup lots repeatedly to ensure quality, and oversee the milling, bagging, and export process for all of the coffees purchased by Ally this year. This hard work allowed us to fulfill client needs, expand our sourcing approach, and increase our purchase volume in Ethiopia by more than 50%.

      In addition to continuing our work with our producing and exporting partners Tracon and METAD, we are proud to expand and diversify our offerings by sourcing coffees for the first time from Boledu Industrial PLC, SNAP, Heleph Coffee, Welichu Wachu, and Mormora Coffee. Many of these opportunities developed thanks to the new regulations governing the Ethiopian coffee industry. These supplier partnerships will help us continue to provide traceable, year-round supply of quality coffees from Ethiopia. We are proud to embrace these companies and the people who staff them, and look forward to continuing to find ways to open up opportunities for their coffee to find its way to roasters around the globe.

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