KCNY and Currency
This Friday (19) not only marks the end of a week that saw a volatility of 3060 points in coffee prices on the New York Stock Exchange for the July/24 expiration date, but it also marks the end of trading for the May/24 expiration date. From Monday 22nd, the delivery notification period will begin.
There was a lot of intraday volatility during the week and an accelerated advance in prices, which even retreated on Thursday, but ended the week on an upward trend. May/24 was quoted at 253.70 and July/24 was between a low of 214.80 and a high of 245.40.
Position rollovers off the May/24 expiration date have come to an end and many buyers have also rolled over their positions to July/24, aiming to avoid settling at the high levels seen recently and with the expectation of a drop in prices in the coming weeks. The K4XN4 spread ended the week at 9.55. The market has been driven by several factors, including fundamental factors such as the supply outlook, especially for robusta, climate uncertainties and their impact on the next crop and other technical market factors.
Prices for the July/24 maturity since 01/01/24. Source: Barchart.
On the foreign exchange market, the dollar continued to appreciate during the week, continuing the movements of the previous week. In the macroeconomic scenario, among the reasons for this movement is the uncertainty over the Fed’s next steps in relation to US monetary policy and possible interest rate cuts that were planned for this year. With tensions rising in the Middle East, the tendency is to increase the flow of investments in strong currencies such as the dollar. In addition to a stronger dollar, we have a weaker real in the face of fiscal risk in the domestic economic scenario. As a result, the dollar was quoted at between R$5.1039 and R$5.2874, its highest level since March/2023.
Last Friday (12), the Commodity Futures Trading Commission (CFTC) released its report on traders’ positions in the market for the week ended Tuesday (09), which showed an increase of 5,491 lots bought, totaling a net balance of 48,550 lots against a previous balance of 43,059. This Friday (19) the report with the data referring to the close of last Tuesday (16) is due to be released.
Certified stocks continue to rise and closed this Friday (19) at 643,090 60kg bags, with 48,979 bags pending approval. More than 99% of these stocks are held in European warehouses, with only 2,085 bags certified in US warehouses.
JULY/24: Min: 214.80 | Max: 245.40 | Last: 231.85
BRL/USD: Min: 5.1039 | Max: 5.2874 | Last: 5.1966
*Data as of the completion of this report
WEATHER
The rainy season in the Southeast begins in October and ends in mid-April. Last year there was no significant rain in October, November and December. Significant rainfall for agriculture began to occur in January.
The cold front that arrived in recent days in the Southeast was weak in intensity, and due to the action of El Niño, the mass of polar air that came in behind the frontal system did not cause a sharp drop in temperatures. There is no risk of frost this April.
Rain forecast for the week:
South Minas region: between 5 and 10 mm.
Zona da Mata region: between 5 and 10 mm.
Cerrado region: no rain is forecast.
Alta Mogiana region: no rain is forecast.
Garça region: no rain is forecast.
DOMESTIC MARKET and FOB
The domestic market remains strong and active, despite all the movements in NY and the dollar, with a lot of negotiations between traders. Sellers’ bases rose at every turn and the market remained well supplied, with some producers leaving positions that had been in storage for some time, waiting for better prices.
On the FOB, few deals were reported. Buyers expected to find more open differentials with the leverage of NY ICE, which didn’t happen. Sellers remained more cautious. Many rollovers for the July/24 expiry date took place this week on the part of buyers, who didn’t want to fix their deliveries at current market levels. There was practically no business for Rio Minas quality, given the limited supply on the domestic market and the caution of exporters. 600 defects continues to be in high demand domestically and on the FOB, as it is an alternative for roasters to replace robusta in their blends.
The requests from sellers in the domestic are as below:
Strictly soft good cup running screen: seller around BRL 1,290.00
Strictly soft fine cup running screen: seller around BRL 1,350.00
Rio Minas: Running screen with 25% low grades around BRL 1,160.00 with few sellers;
600 defects: around BRL 1,200.00
LOGISTICS
- Port workers staged a strike on Thursday morning (18) at three points in the Port of Santos, in protest at the possible end of exclusivity. The action, which initially lasted six hours on the first shift, from 7am to 1pm, aims to defend labor interests and discuss the parameters for hiring temporary port workers, as reported by A Tribuna.
This week, the ports of Rio de Janeiro and Itaguaí/Sepetiba were inspected by the Ministry of Labor. Approximately 70 agents were at the access gates and in the port facilities to inspect compliance with the legislation by the companies operating there, including carriers.
For this reason, deliveries of full containers and the collection of empty equipment were hampered, which resulted in some shipments missing their deadlines.
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.