Dear valued partners,
Yesterday, Brazil’s Health Minister confirmed 407 new deaths of Covid-19 registered in the past 24 hours, the highest number of deaths recorded in a day across the country since the first case confirmation. Brazil has reported over 49,492 confirmed cases and upward of 3,313 deaths.
Amid political tensions, the Dollar renewed record highs in Brazil, surpassing 5.74 reais (R$), with the resignation of Sergio Moro, Minister of Justice of the government of Jair Bolsonaro, after the dismissal of the general director of the Federal Police, increasing pressure on the Brazilian currency already affected by the speculations about a new cut in the Selic rate due to the impacts of the pandemic on the economy. At the same time, Brazil struggles to contain the Covid-19 spread in the country.
The news moved the markets in Brazil, and the Central Bank announced for today auctions for the dollar line and foreign exchange swap contracts to roll over maturities in both instruments. In Brazil, harvesting started timidly on a few farms, maintaining the forecast for the full harvest period in May on most properties, where many prevention measures are being taken. Producers who have remaining lots of the crop 19/20 in Brazil are finding good
domestic prices, as it is a between-harvest period. However, the financing constraints and high credit supply rates are holding back exporters on from buying.
The harvest in Central America is already ending in most countries, with large crop losses by climatic and other factors. In Guatemala, the lack of labor caused by the new coronavirus meant delays at the end of the harvest, hampering supply. Nicaragua, El Salvador and Guatemala with 15 to 25% of crop loss; Honduras, the leading producer of Central America, had a major crop loss of around 40%, besides the port being closed for a few weeks between March and April. Costa Rica still faces low production. Colombia has a forecast of high production in the new harvest, which is still happening in some regions, but also concerned with the availability of labor during the harvest.
Global coffee demand seems to be a subject of greater delicacy now, since the consumption out-of-home has decreased significantly and there are concerns around reduced household incomes for rising unemployment worldwide. Although historically the income elasticity of demand for coffee is low, this scenario of global impacts is unprecedented.
Let’s keep believing and investing in the coffee culture so together we can keep moving coffee forward!
Atlantica Coffee team