KCNY and Currency
The week was a little shorter on the NY ICE, due to the Juneteenth holiday on Wednesday (19) and registered the start of the July/24 delivery period. As a result, coffee prices for the September/24 expiry date, the most liquid, recorded 1320 points of oscillation. The low of 223.05 was recorded on Tuesday and the high of 236.25 on Thursday, in daily volatility of almost a thousand points, but they ended the week slightly up, at 225 cents per pound.
In terms of fundamentals, the same factors remain on the radar: the global coffee supply and, especially, Vietnam’s production, which has a red alert signal for robusta production, given that the country is the largest producer of the variety; on the other hand, we have the harvest in Brazil, which is going well, despite concerns about yield, and Brazilian exports, which have been showing record volumes in recent months.
In foreign exchange, the dollar was quoted at between R$5.3857 and R$5.4827 and the real continues to lose strength against the dollar, showing the worst performance among the main global currencies in 2024, with a rise of more than 12% in the year. On Wednesday (12) the Copom (Monetary Policy Committee) met and decided to keep the country’s interest rates at 10.5% per year, pausing the cuts that had been taking place for 7 consecutive meetings since August/23. In the publication, Copom said that it “understands that this decision is compatible with the strategy of converging inflation towards the target over the relevant horizon”.
The USDA released a report on world coffee production on Thursday (20), which forecasts that coffee production is expected to recover by 7.1 million bags compared to the previous year, totaling 176.2 million, mainly due to the continued recovery in Brazil. With a larger supply of coffee, it is also estimated that global exports should increase by 3.6 million bags to 123.1 million. Consumption, on the other hand, is expected to rise by 3.1 million bags to 170.6 million bags, resulting in an estimated ending stock of 1.9 million bags, bringing the total to 25.8 million bags after three years of decline.
Last Friday (14), the Commodity Futures Trading Commission (CFTC) released a report on the positioning of Traders in the market for the week ended Tuesday (11), who reduced their net long balance by 1,604, showing a long balance of 44,939 lots, compared to the previous balance of 46,543 lots on 04/06. This Friday (21) the report with the data for the close of last Tuesday (18) is due to be released.
Certified stocks ended this Friday (21) totaling 831,595 60 kg bags, representing an increase of 66,232 bags over the last month. There are currently 51,716 bags pending approval.
SEPTEMBER/24: Min: 223.05 | Max: 236.25 | Last: 225.00
BRL/USD: Min: 5.3857 | Max: 5.4827 | Last: 5.4424
*Data as of the completion of this report
WEATHER
Winter began on June 20 in Brazil and lasts until September 22. This is when the dry season occurs in the coffee-growing regions, as the Tropical Maritime air mass makes it difficult for rain to form and also blocks the arrival of cold fronts.
Climate forecast models show that this year’s winter will be warmer and drier. No strong polar air masses are expected to arrive. For the next few days, the dry air mass will continue to make the weather sunny in almost all coffee-growing regions.
No rain is forecast for the week.
DOMESTIC MARKET and FOB
Prices on the domestic market remain firm and buyers have to take advantage of the daily fluctuations in NY ICE prices against the devaluation of the real and make their deals as needed. The market as a whole is still in short supply and only part of the volume already harvested from the 24/25 crop is being traded. Sellers remain capitalized and can choose the best time to sell. On the FOB, caution remains over the yield and development of the new crop’s screen sizes, with a firm price difference between MTGB and large beans of the same quality. At the same time, there was a good volume traded for shipment in the short term, showing an improvement in demand FOB Brazil.
The requests from sellers in the domestic are as below:
- Strictly soft good cup running screen was traded at R$ 1,330.00
- Strictly soft fine cup running screen reached R$ 1,400.00
- Rio Minas: Running screen keeps being negotiated between R$ 1,150.00 and R$ 1,180.00 depending on low grades and screen size percentage.
- 600 defects reached R$ 1,220.00
LOGISTICS
For another week we didn’t have any cancellations or postponements due to a lack of equipment, but we did have new bookings that were rejected in advance by the shipowners due to a shortage of containers, especially 20′ units.
- In May, the rate of schedule changes and delays for ships loaded with coffee at the Port of Santos (SP) was 78%, with a total of 97 container ships postponing shipment at Brazil’s main export terminal. In the previous month, April, this percentage was 80%. The information is from the Detention ZERO Bulletin, developed in partnership by CECAFÉ and ElloX Digital.
- According to CNN, major maritime groups have called on governments “with influence” to intervene and put an end to Houthi attacks on ships in the Red Sea, following the sinking of a second cargo ship this week. This appeal emphasizes the growing human cost resulting from the interruption of one of the world’s main trade routes, which has been virtually closed to cargo ships since the end of last year.
Atlantica Coffee Team
Disclaimer:
This analysis report aims only to provide information about the coffee market, based on internal and public sources, valid at the time of its dissemination. It does not aim to guide recipients in making any decisions, which are therefore solely the responsibility of the recipient. Atlantica Coffee is exempt from any liability arising from direct or indirect losses.
