Weekly Coffee News: East Africa

General News

As climate change makes its presence felt, the United States finds itself navigating a series of weather-related hurdles, adding a touch of drama to the nation's daily rhythm. Last weekend's powerful storms disrupted the power supply in the South. With extreme winds, rain, and hail making a grand entrance, the electric infrastructure took a heavy beating.

But nature isn't one to stop at a single act. Heatwaves are now casting their hot spell on various regions, with Texas setting new records for high temperatures that could melt a Texan's boots. And let's not forget the Northeast, dealing with the consequences of Canadian forest fires. Billows of smoke wafting over the border have prompted residents to shut their doors and windows. Unfortunately, power cuts have left many longing for the sweet relief of air-conditioning, leading to a few sweaty brows and creative attempts at keeping cool.

Across the pond, Europe and other corners of the world aren't exempt from the climatic chaos. Extreme heat, forest fires, and drought are staples in many nations' daily agenda. The next few years promise to be a wild ride, reminding us that Mother Nature's sense of humor can be as capricious as a British summer's day.

Shifting our focus to macroeconomics, the conversation continues to revolve around the need to keep interest rates rising. Jerome Powell, Chair of the US Federal Reserve, has signaled further rate hikes on the horizon. The era of low-interest rates is slowly bidding its farewell, placing pressure on various industries, especially those inclined to leverage.

But when focusing on our coffee world, we observed the international Arabica coffee prices' continued free-fall, testing levels not seen since January 2023. Breaching the magical 160.00 c/lb support has opened a range for new and further lows. The week has closed at 159.00 c/lb, a 3.5% retracement compared to the previous Friday's close.

The sell-off in New York influenced the Robusta market performance, bringing prices back down to levels seen six weeks ago. London closed the week at 2,491 USD/MT pushing prices down by 9.3% compared to the previous week's close.

As the United States prepares to celebrate the 4th of July, markets will temporarily suspend their activities on Tuesday, with many participants yearning for an extended vacation bridge on Monday as well. A week of subdued market activity awaits, offering a momentary respite from the whirlwind of economic fluctuations.

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

Ethiopia

Ethiopia's coffee exporters are grappling with mounting government pressure as the expected export surge remains elusive. The numbers paint a stark picture, revealing a notable volume gap during the year's first half. This dilemma comes as little surprise, given that internal replacement prices hold well above what international buyers are willing to consider. As a result, the sluggish pace of exports finds itself challenged in the quest to secure buyers for these high-priced coffees in a world sensitive to economic downturns. Navigating these turbulent waters is no easy feat.

Compounding the exporters' woes are bureaucratic hurdles and logistical bottlenecks that hinder the smooth flow of the export business. Heavy rains transform streets into treacherous mudslides, impeding the transportation of coffee from the interior to Addis Ababa. Delays become the norm as trucks arrive behind schedule, risking damage to the coffee that may necessitate additional drying. Moreover, dry mills encounter quality issues upon receiving the precious beans. Yet, amidst these trials, glimmers of hope emerge in the form of exceptionally high-quality coffees that bring smiles to the cupping team whenever an offer, pre-shipment sample, or arrival sample finds its way to our lab.

Meanwhile, nature continues its dynamic development, and coffee trees are carrying what looks like a promising 23/24 harvest that lies just four to five months ahead. However, the looming threat of intensified market pressure awaits if the akrabis and farmers don't commercialize the current crop soon. Sometimes the first loss is the cheapest.

Amidst these challenges, Ethiopia's coffee exporters demonstrate remarkable resilience and resourcefulness, embodying a spirit that persists against all odds.

Export logistics continue to be complicated. There is a general lack of adequate food-container equipment, and vessel space is limited. Unfortunately, delays are part of our daily bread-and-butter business.

Kenya

The Kenyan Agriculture and Food Authority released a regulation taking away the licenses of actual marketing agents. The original task of these legal entities is to market (and mill) the coffee on behalf of the coffee farmers and cooperatives at the Kenyan Coffee Exchange. Exporters (who also need a license) buy the coffee at the auction. Similar decisions have been made in the past, and little ever changed in reality. The "old" marketing agents will probably rebrand their companies – old wine in new bottles.

The dry mills are busy preparing the last lots for export, and farmers are picking the fly crop. This harvest looks good in terms of quality and volume.

Weather conditions are very good with abundant rains, and sunshine is all but shy, helping to dry the coffees on the raised beds.

No significant news from the port. Operations are running smoothly.

Tanzania

The pickings of the 23/24 harvest in northern Tanzania are looking very good. Coffee farmers around Mt. Kilimanjaro and Mt. Meru pick the cherries and process them to parchment at the washing stations. Only the higher altitude regions are still diligently monitoring the coffee cherries' ripening process, eagerly awaiting the optimal moment to begin their own harvesting operations. With a favorable climate prevailing, characterized by intermittent showers and ample sunshine, the conditions bode well for a successful harvest.

The key coffee-producing regions in the southern highlands around Mbeya, Mbozi, and Mbinga have slowly started with the harvest. While farmers start picking the red and ripe cherries, the small-scale washing stations known as CPUs (Central Pulping Units) are being prepared for the season. First deliveries to the CPUs occur, and coffee cherries are carefully selected, de-pulped, fermented, washed, and dried on raised beds under the African sun.

As the shipping season has yet to start, there is no major news from the port of Dar es Salaam.

Rwanda

The coffee regions in the North, West, and South are recovering from heavy rainfalls and following floods and landslides. Houses and roads need to be rebuilt. International aid agencies and the local government are helping to bring the region "back to normal".

The coffee harvest is almost complete. Some regions in the eastern part of Rwanda still show some pockets with cherries on the trees, but washing stations in the rest of the country are ramping down their activities. Parchment is being delivered to the dry mills in Kigali. Warehouses are pretty packed, and private exporters and cooperatives are focused on milling the parchment and getting the coffee ready for shipment. The first samples are reaching the lab, and we look forward to cupping them.

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