Local use coffee surges on ECX

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(Photo: Anteneh Aklilu)

The trading of local use coffee surges at the trading floor of Ethiopian Commodity Exchange (ECX) against the past experience to which experts stated that it is an unequivocal indication for the commodity coming from major producing areas preferring to use an alternative market.
It is to be recalled that Capital reported that the regional administration of Oromia took a direction to trade export coffee on an alternative market place as opposed to the electronic trading floor.
Information that Capital obtained from sources in the trading floor and coffee experts including exporters, signaled that the trading of local use coffee flourished in the first half of the trading year and sat at the top in terms of trading volume and value.
Coffee sector experts said that the in the previous circumstance the export coffee took the leading position in volume similar to value.
They said that the information they secured from the trading floor indicated that the product that came from Oromia is mainly traded in the vertical integration market that the Ethiopian Coffee and Tea Authority (ECTA) introduced about two years ago as an alternative the trading market to ECX.
On its first half year performance evaluation for the 2021/22 budget year, ECTA has also applauded the success secured from the vertical integration.
During the half year evaluation meeting, Adugna Debela, Director General of ECTA, said that the vertical integration created conducive environment to sale the bean with in short period of time and better product quality.
Recently, Adugna told Capital that to amass huge success on the export earnings and export volume the role of alternative market was crucial.
In the first half of the budget year the hard currency earnings from coffee, which is the major source of foreign currency from commodity trading, has climbed by 90 percent compared with the same period of the 2020/21 budget year.
In the first six months of the budget year that ended in the third week of December 2021, the coffee export contributed to earn USD 578 million which was USD 304 million a year ago.
Similarly the volume has also increased by about 63 percent compared with the same period of the preceding year. In the first six months of the budget year over 148,000 tones of coffee has been exported showing increment of 57,000 tones from the export of the past year similar period.
According to the information from experts in the sector in the first six months of the budget year the volume of export coffee that traded at ECX has dropped by more than half compared with the same period of last year.
Sources said that from the total coffee trading at ECX, the volume and value of local coffee took the major share by more than half, “it is unusual in the past experience.”
They said that most of the export commodity particularly comes from Oromia, which is the major source of the bean is traded through vertical integration that directly connects farmers or suppliers to export traders.
They said in the first six months of the budget year the total trading volume of export coffee at ECX has dropped by not less than 80 percent that has also reflected by value, which experts estimated to decrease by about 70 percent.
“The value reduction shall not be similar with the volume due to the price increment of coffee in the international market,” they explained why the trading value shall not equally reduce in the stated period.
In the first half of the 2020/21 budget year the export coffee trading volume at ECX was over 60 thousand metric tons, while this year exact figure is so far not disclosed by the exchange. However, experts estimated that that it would not be more than 15 thousand metric tons.
A week ago Capital reported that the price of export coffee at ECX has increased at least by three forth compared with the same period of last year.
The price of specialty, which is usually very small compared with commercial export coffee volume but has big difference in terms of price, and local coffee has also surged.
Sources indicated that the regional administration in Oromia insist coffee traders to supply the bean directly to exporters rather than selling through ECX. The decision mainly was applied since the new products mainly started to harvest from October of last year up to the coming month, while slight portion of the commodity is still sold through ECX. Meanwhile the volume of specialty coffee that traded at ECX has shown reduction in the first half of the year but that is incomparable with the percent of export coffee.