Weekly Coffee News: East Africa

General News

A slower weekend allows you to halt and dig deeper into the otherwise hectic and vivid life. Putin's military invasion of Ukraine is ongoing. Further expansion of his war onto other countries of the West looks more and more probable, and different European nations are preparing for this scenario. For now, Putin's aggression is only on a verbal and digital level, but we have all seen how quick this can change. As learned in the past, appeasement talks will surely not tame an aggressor's mindset. Despite the economic slowdown in Europe and the UK, European economies must start investing more resources in military infrastructure. History has shown time after time that a robust military defense is the best way to prevent aggression in the first place.

The situation in Gaza continues to be horrifying, and there is no quick fix to this highly complex and interlinked conflict. The spillover effects continue to motivate Houthi rebels to attack commercial ships in the Red Sea. The US and UK navy forces found further support from France, Germany, and Greece. The joint military action has destroyed unmanned surface vessels, anti-ship missiles, and drones. Nonetheless, transit through the Suez Canal has dropped massively, and all shipping lines are rerouting their ships southwise via South Africa's Cape of Good Hope. Vessels from East Africa, India, Indonesia, PNG, and Vietnam will be delayed, and rates are becoming more expensive. Climate change adds another layer of complexity to the already extremely tense geopolitical situation. The world has undoubtedly registered the warmest February since the temperature recording began. The winter sports session in the Alps can only be made possible with massive investment in technology, and some artificial white snow stripes appear in the otherwise green landscape. At the same time, a fire inferno in Texas is fueled by high temperatures and strong winds, making it the most significant fire recorded in Texas history.

The global financial world, or at least the tech sector, is entirely immune to the geopolitical and environmental situation. The sector's latest financial results are very impressive. It looks as if the sky is the only limit they know. We saw Crude Oil having a solid upside move on the commodity side. Soft commodities, including Cocoa, Cotton, Orange Juice, Lumber, Sugar, and, of course, Coffee, saw a mixed week. Cocoa and Cotton have had a very strong performance since the beginning of 2024, while Coffee and Sugar – despite intense volatility – have almost stayed unchanged since the start of the year. International Arabica prices marked a 6-week-low on Tuesday but managed to recover and closed the week with a 1.7% win at 183.30 c/lb. Robusta continues its impressive bullish trajectory, and after a short slippage on Tuesday, marking a 5-week low at 2,981 USD/MT, it managed to course-correct and closed the week with a substantial 3.7% gain at 3,143 USD/MT.

To stay informed about the ever-changing dynamics of the coffee market, refer to the table below. We update this table weekly, providing the latest insights and updates.

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Ethiopia

After the Ethiopian government entered an agreement with Somalia's breakaway region of Somaliland to have access to the Red Sea, Somalia raised concerns, accusing Ethiopia of territorial annexation. Somali President Hassan Sheikh Mohamud voiced this concern during last week's African Union summit in Addis Ababa. The maritime deal would allow Ethiopia to establish a port and naval base over 50 years along a 12-kilometer stretch of Somaliland's coastline, granting Ethiopia access to the Gulf of Aden and the Red Sea.

Weatherwise, the southern regions such as Sidama and Yirgacheffe, as well as the southwestern region of Jimma, are experiencing sunny days with occasional refreshing rains, bringing moisture to the soil and nourishing coffee plants.

New crop coffee is being transported to dry mills, which are working in full swing. Washed fresh crop coffees are hulled, sorted, and graded before being dispatched to the port of Djibouti for shipment. Natural coffees are also being prepared for export, but the main focus is on the washed qualities for now. This is an exciting time of the year, as fresh crop coffees from Ethiopia will keep coming to our lab, putting big smiles on our cupping team. Stay tuned.

Prices experienced a slight increase for both natural and washed coffee.

The transit and security challenges at the Red Sea continue to affect Ethiopia's logistic operations. Warehouses are stocked, but limitations by some shipping companies may lead to longer and delayed transit times.

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Kenya

Kenya is currently experiencing a heat wave, with forecasts showing temperatures of over 30°C across different parts of the country.

Despite the harvest being complete, some parchment is still retained on farms because dry mills are heavily occupied. Sale 18 at the Nairobi Coffee Exchange took place last week. Coffee is flowing, and quality is improving. High-grade coffees are fetching premiums, and farmers push for volumes motivated by good prices. Prices remain relatively low for commercial grades.

Besides the difficulties from the escalating conflict along the Red Sea route, no significant news is reported from the port of Mombasa.

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Tanzania

Tanzania's central bank anticipates a 5.5% growth in gross domestic product (GDP) for 2024, following an approximate 5% expansion in 2023.

According to the Tanzania Meteorological Authority (TMA), the current hot conditions observed in several parts of the country will lessen with the arrival of the Masika rainfall season. Masika was forecasted to start in late February and extend until mid-May. Ample rain is expected in various regions, including the northeastern highlands, the northern coast, the Lake Victoria basin, and parts of Kigoma. Cities such as Dar es Salaam, Arusha, and the islands of Zanzibar can anticipate a season of normal to above-normal rainfall.

Harvest in the south is complete. As the harvest cycle continues, coffee plants are in their cherry development stage. Cherry development can also be seen in the north, where a few AMCOS are still operating, waiting for coffees to finish drying. Farmers are preparing for the upcoming season.

Due to high demand, the port of Dar es Salaam continues to be congested. Some shipping lines are experiencing a scarcity of food-grade containers.

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Rwanda

Precipitation is expected in areas around Lake Kivu and Butare in the southeast.

Harvest season has officially started in Rwanda. Activities began earlier than expected in the north-western regions, where washing stations are already processing cherries. The game is on in the rest of the country, too. Cherry prices remain stable as the season opens up with small quantities. Volumes are expected to start picking up as March unfolds. Some rain has delayed ripening in some areas.

No significant news in terms of logistics.

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Uganda

Like its neighbors Ethiopia and Tanzania, Uganda has partnered with Enveritas. This partnership aims to enforce compliance with the European Union Deforestation Regulation (EUDR) by enabling Enveritas to verify that coffee exported from Uganda is not sourced from land deforested after 2020.

The Ugandan Coffee Development Authority (UCDA) reported a lower export performance in January 2024 than on January 2023. Robusta exports reduced by around 2.2%, while Arabica exports decreased by 4.4%. Nevertheless, the value of coffee rose in correlation with higher global coffee prices, primarily fueled by ongoing supply concerns in Indonesia and Vietnam. In the last twelve months, coffee exports increased by 7% compared to the previous period.

In terms of harvest, Arabica's fly crop is gaining pace. Local flow is slow, but this can change as the harvest accelerates in Western Uganda. Local prices remain high.

As for Robusta, the harvest is pretty much complete. Little coffee is flowing as much of the crop has already been sold.

No significant news coming from the port of Mombasa.

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East African Coffee Production