Weekly Coffee News: East Africa

General News

Hardly a week goes by without extreme changes in the global landscape. New political, economic, and environmental realities overtake us at breakneck speed.

Be it the new elections in the USA with Donald Trump as the new president or the failed traffic light coalition in Germany. In Europe, especially Germany, economic growth fails to materialize, and the national economy is shrinking. The automotive industry is experiencing massive slumps, destroying jobs and closing factories. Regardless of this, Putin's invasion of Ukraine continues, and Israel's fight against Hamas, Hezbollah, and Houthi terrorists seems to have no end in sight. Then, there is the increasing number of natural disasters. There were new floods in Spain; in California, the forests are still burning, and several typhoons have been reported in Asia alone. The consequences of these typhoons are always similar: increased heavy rainfall and flooding. People die, houses are destroyed and infrastructure is severely damaged. Southern Africa is recording record heat and droughts.?

And as frightening as it may sound, welcome to the new reality of the XXI century; it doesn't look like these scenarios will change any time soon. Fierce geopolitical conflicts, overwhelming natural disasters, economic uncertainty, social stress... Problems and increased risks are everywhere. But where there are risks, there are also opportunities. May our eyes discover them!

And so it was last week - at least for those of us who were betting on rising prices. Prices on the New York Arabica Exchange rose massively ahead of first-notice-day and reached a new 13-year contract high of 285.60 c/lb. The March 25 contract (KCH25) gained an astonishing 30 c/lb in four consecutive sessions. On Friday, the market closed with a weekly gain of 11.9% at 283.30 c/lb. Robusta prices in London also recorded a similar rally. Here, the spot price for the January 25 contract (RMF25) also shot up, reaching a new four-week high of USD 4.868/MT. The week then closed on Friday with a gain of 9.1% at USD 4.773/MT.?

But where does this rather extreme "momentum" come from? There is no new fundamental data on coffee-related topics from the countries of origin. There has been good rain in the coffee regions of Brazil, and soil moisture has largely been restored. However, it remains to be seen what damage the drought may have caused to the coffee trees beforehand - but this is far from justifying the rally on the coffee exchanges to this extent. Normally, a strong US dollar tends to correlate with weaker coffee prices - but a considerable strengthening of the US dollar in recent weeks has not helped in this specific case either. And what about the unfortunately still existing legal uncertainty about the entry into force of the EUDR? Could that be a reason? No one can say for sure. We see a mixed picture in the commodity prices covered by the EUDR. Prices for coffee (+18%), cocoa (+20%), timber (+28%), and palm oil (+38%) have risen sharply in recent months. Soya, rubber, and beef, also covered by the EUDR, have stagnated or fallen slightly. Are these three commodities perhaps simply not that relevant for the European market?

The following table contains all the information relevant to coffee. It is updated weekly:

Origin News

Ethiopia?

Unseasonal rains continue to fall across most coffee-producing regions, such as Sidamo, Yirgacheffe, Guji, Jimma, Lekempti, and Bebeka. This delays the harvest and has even caused some cherries to fall off the trees. The wet weather also poses challenges in processing, particularly in the drying of coffees. Cherry prices have been affected too, showing a slight decline. Looking ahead, scattered rains are expected to continue across southern and western regions throughout the week.

Logistics remain challenging. The Djibouti Port is still congested, resulting in unrealistic schedules and ongoing delays.

Kenya

Following a dramatic series of impeachment votes that led to Vice President Rigathi Gachagua's removal, Kithure Kindiki has been sworn in as Kenya's new Deputy President. Kindiki, a 52-year-old former law professor, served as President William Ruto's Interior Minister for the past two years. He officially assumed the role on November 1st and is now the principal assistant to President Ruto.?

Switching from politics to weather: occasional rains continue across Kenya, supporting the ripening of the main crop. Scattered rains around Mt. Kenya and the central regions such as Kiambu, Murang'a, and Kirinyaga are forecasted throughout the week.

In Central Kenya, the harvest is progressing well, with ripe red cherries being collected and delivered to washing stations. Increasing volumes of parchment are reaching the dry mills, and auction offerings are gradually rising.

Demand among exporters remains strong, driving differentials higher.

At the port of Mombasa, operations are relatively normal, though challenges persist in securing containers, leading to some delays.

Tanzania

At least 13 people have died, and over 80 have been rescued after a building collapsed in Tanzania's commercial capital, Dar es Salaam. The four-story building in the Kariakoo market area in eastern Dar es Salaam collapsed unexpectedly, fortunately before the market opened. Rescue teams are continuing efforts to free those still trapped inside.

Weather conditions have been slightly warm. However, scattered rains are predicted throughout the country, all the way from Bukoba in the north to Arusha, Ngorongoro, Mbinga, Mbeya, and Mbozi.?

In the southern regions, Arabica harvest activities have ended. The focus is now on the dry mills operating at full capacity. As for Robusta, the season is over too.?

Demand has been strong, and differentials firmed up compared to the previous weeks.

The Port of Dar es Salaam remains congested and the lack of food-grade containers continues to be a constant struggle.?

Rwanda

Coffee-wise, Rwanda is relatively quiet at the moment. The focus is now on the development of the new harvest, which typically starts around March. So far, reports indicate good flowering. The weather conditions have also been ideal, with good amounts of rain, giving us a positive outlook for next year's harvest.

Uganda

The Robusta crop has started in Uganda's central lowlands and eastern regions. Coffee has begun reaching Kampala, although heavy rains hinder coffee processing. At the same time, the Arabica harvest in the east has taken off too.

As of October, coffee exports totaled approximately 496,000 bags, marking a 5.7% increase compared to the same period last year. Robusta accounted for about 90% of the total coffee exports. The Uganda Coffee Development Authority (UCDA) forecasts November exports to reach 520,000 bags.