KCNY and Currency
Coffee prices on the New York Stock Exchange continued to rise this week. As the May/24 delivery period approaches on the 22nd, rollovers have intensified and the July/24 maturity has established itself as the most liquid, with more than 116,000 lots open. Its prices fluctuated between a high of 229.75 on Friday and a low of 207.85 on Monday (08), with volatility of 2190 points in the week, 1450 of them on Friday (12) alone. The May/24 expiry reached 236.20 cents per pound.
Among the reasons for this upward movement is the impact of the recent aggressive increases in robusta prices on the London stock exchange, given the limited supply in the largest producers of the variety, Vietnam and Indonesia. The expiration of May/24 options in NY on Friday (12) also influenced the movement. The arbitrage between LONDON and NY opened the week at -53 N4xN4 on Friday (12).
Prices for the July/24 maturity since 01/01/24. Source: Barchart.
In foreign exchange, the dollar rose sharply in the week, with the release of the US CPI (Consumer Price Index) for March, which rose 0.4%, favoring the strengthening of the dollar, which was quoted between R$4.9991 and R$5.1483 in the week. The Brazilian IPCA for March/24 was also released during the week, closing at 0.16%, below the 0.25% forecast, depreciating the real.
On Tuesday (09) Cecafé released its March/24 export report, which showed a record volume for the month, totaling 4.293 million 60kg bags exported, a figure that represents an increase of 37.8% compared to the same period last year. Conilon exports remain strong and exceeded 846,000 bags during this period.
Last Friday (05), the Commodity Futures Trading Commission (CFTC) released its report on traders’ positions in the market for the week ended Tuesday (02), which showed an increase of 8,775 lots bought, totaling 43,059 against a previous balance of 34,284. This Friday (12) the report with the data for the end of last Tuesday (09) is due to be released.
Certified stocks continue to rise and closed this Friday at 639,650 60kg bags, representing an increase of 188,923 bags in one month. There are currently 64,404 bags pending approval.
JULY/24: Min: 207.85 | Max: 229.75 | Last: 220.45
BRL/USD: Min: 5.0000 | Max: 5.1483 | Last: 5.1232
*Data as of the completion of this report
WEATHER
El Niño is weakening, and climate forecast models indicate that La Niña will set in by the end of the fall season, scheduled for June. Still under the influence of El Niño, temperatures remain above average in coffee-growing regions during April.
A cold front is expected to arrive in the Southeast of Brazil from Thursday 18th. However, the frontal system is expected to arrive with little intensity and there is no forecast of a sharp drop in temperatures. There is a chance of cloudbursts and light rain.
Rain forecast for the week:
South Minas region: between 15 and 20 mm.
Zona da Mata region: between 15 and 20 mm.
Cerrado region: between 15 and 20 mm.
Alta Mogiana region: between 15 and 20 mm.
Garça region: between 15 and 20 mm.
DOMESTIC MARKET and FOB
With the strong rise in coffee prices in NY and the strengthening of the dollar, sellers’ bases on the domestic market became higher. These movements contributed to a lot of business being done during the week, given the higher prices at the selling end, as well as business for future deliveries.
On the FOB, even with the fluctuations in NY, there was no significant opening of differentials for shipments in the short term, which were at replacement levels. For shipments from June onwards, several deals were made. Regarding Rio Minas, the market continues to lack liquidity domestically, impacting on offers from exporters, who remain cautious given the volatility of the differentials for this quality and its low supply in the period. Grinders and 600 defects continue to be highly demanded by the industry abroad, as they offer an alternative to replace robusta in the blend.
The requests from sellers in the domestic are as below:
Strictly soft good cup running screen: seller around BRL 1,200.00
Strictly soft fine cup running screen: seller around BRL 1,250.00
Rio Minas: Running screen with 25% low grades around BRL 1,100.00 with few sellers;
600 defects: around BRL 1,020.00 with high demand;
LOGISTICS
- According to the most recent Detention Zero Bulletin (DTZ), produced in partnership between the Brazilian Coffee Exporters’ Council (Cecafé) and the logistics technology startup ElloX Digital, the rate of change of schedules and delays for ships carrying coffee at the Port of Santos (SP), the main point of trade for the product in Brazil, reached 80% in March 2024. This percentage involved a total of 90 container ships, with a maximum change of 39 days between the first and last deadline.
Ship delays at the ports of Rio de Janeiro and Santos continue to be frequent, with a direct impact on export operations, as well as extra costs for early delivery, pre-sacking and additional container stays. Stocks of equipment also remain low.
We’d also like to warn you about the restricted allocation for April departures. Some European destinations are already completely booked out.
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.