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Weekly report – Brazilian Coffee Market – May 20th ~ 24th 2024

by May 7, 2024Market report0 comments

KCNY and Currency

Coffee prices on the New York Stock Exchange began the week without much change on Monday (20), with a rise of 0.10 cents per pound in its most liquid expiration date. However, on Tuesday (21) and Wednesday (22) there was an accumulated rise of 6.65% for KCN4, and the returns were only felt on Thursday (23) with a fall of 2.18%. All in all, the week saw a range of 1815 points, with a low of 203.65 and a high of 221.80, following the movements of robusta coffee on the London Stock Exchange. The beginning of the harvest in Brazil indicates a prospect of better supply, which is putting pressure on prices.  

According to the 2nd Coffee Crop Survey for 2024, published by Conab (National Supply Company), the expected crop for arabica coffee in Brazil is 42.11 million bags, representing a 5.9% increase in the performance of Brazilian plantations and a higher production per hectare. 

Prices for the July/24 maturity since 01/01/24. Source: Barchart. 

On the foreign exchange front, the dollar has been moving cautiously due to the indications from the FOMC meetings regarding US monetary policy. The data on the reduction in inflation to the 2% target is still not convincing and so the process of cutting interest rates may take longer than expected. The decision made on Wednesday (22) was to keep them unchanged at 5.25% to 5.5%. On the domestic front, the market continues to monitor the situation regarding the change of management at Petrobras and Copom’s indications for maintaining the Selic rate.  

Last Friday (17), the CFTC released its market positioning report. For the fourth week in a row, there was a reduction in the long balance of hedge funds by 3338 lots, ending the week with a balance of 40,005 compared to 43,343 the previous week. The new report is due out today, May 24.  

Certified stocks continue to rise, ending on Friday (23) with a weekly change of 14,303 bags, totaling 774,686 certified bags. There was also a 3.43% increase this week in bags originating in Brazil, reaching 384,210 bags (49.60%). Pending approvals from all origins amounted to 23,980 bags. 

JULY/24: Min: 203.65 | Max: 221.80 | Last: 218.25 
BRL/USD: Min: 5.0838 | Max: 5.1643 | Last: 5.1527 
*Data as of the completion of this report 


WEATHER

The cold front that has been acting over the last few days in southern Brazil arrives on the coast of São Paulo on Saturday and is expected to organize clouds and rain in some coffee-growing regions.   

The polar air mass that comes in behind the frontal system is expected to cause frost in the states of Brazil’s southern regions, however, there is no possibility of this occurring in the states of São Paulo and Minas Gerais. 

Rain forecast for the week:  

South Minas region: between 20 and 30 mm.  

Zona da Mata region: between 5 and 10 mm.  

Cerrado region: No rain forecast  

Alta Mogiana region: between 30 and 40 mm.  

Garça region: between 30 and 40 mm. 


DOMESTIC MARKET and FOB

The domestic market had little supply during the week as the NY ICE fluctuated. Sellers continue to hold back their offers, hoping for better prices, while buyers’ bases remain distant. During the week, the Santos International Seminar took place, bringing together major players from the national and international coffee markets. On the FOB, few deals were reported, with buyers looking for more open differentials, but exporters remain cautious and are observing the progress of the 24/25 crop, although it is already possible to see a widening between the differentials of bigger and smaller-size beans, reflecting fears about the percentage of big beans of coffee available this season.   

The requests from sellers in the domestic are as below: 

Strictly soft good cup running screen: up to BRL 1,200.00
Strictly soft fine cup running screen: up to BRL 1,250.00
Rio Minas: Running screen with 25% low grades colse to BRL 980.00;
600 defects: up to BRL 1,030.00


LOGISTICS 

This week there were no cancellations or postponements due to restrictions on food grade containers. However, ship schedules in the ports of Santos and Rio de Janeiro still show a high rate of change (both delays and anticipation).  

We would also like to draw your attention to the restricted allocation available on ships leaving in the next 4 to 6 weeks. 

  • As reported by A Tribuna, the construction of the third lane of the Rodovia dos Imigrantes, which is essential to avoid a collapse in cargo transportation at the Port of Santos, has already been estimated to cost R$6 billion and has a completion deadline of four years. However, the deadline for delivery of the entire project is up to two years, which can be extended by one more year. 
  • According to the Portos e Navios portal, the Port of Santos recorded a 13% increase in cargo handling in the first four months of 2024 compared to the same period last year, totaling 57 million tons, which represents a record for this time interval. In addition, cargo handling in April also reached a record for the month, with 14.7 million tons, surpassing the volume recorded in April 2023 by 7.0%. 

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.