KCNY and Currency
Throughout the week, which is a bit shorter in Brazil due to the Tiradentes holiday on Friday (April 21), coffee prices on the NY stock exchange and the dollar were very volatile, with various fundamental and macroeconomic factors impacting prices. As a result, coffee prices broke through 200 cents/lb and the dollar rose above R$5.00 in the middle of the week.
The weather was an important topic due to the drop in temperatures in coffee-producing regions of Brazil and heavy rains, which brought concerns about the possibility of falling fruit. The topic of frost is observed cautiously by the market, as usual. In Colombia, the world’s largest producer of washed coffee, there is an orange alert for the eruption of the Ruiz volcano – this indicates that it may or may not erupt at any moment. In any case, this is a factor that has been followed with concern for the surrounding population and has been monitored secondarily by the coffee market.
In the currency market, the dollar regained value and the real weakened with higher-than-expected inflation data in the UK and US interest rates rising again. Domestically, there is still a sense of uncertainty regarding the new fiscal framework.
On Monday, April 17, the Green Coffee Association (GCA) released data on American green coffee stocks in March 2023, which closed at 6,016,272 bags of 60kg. This number indicates a decrease of 88,690 bags compared to February 2023, but it is higher than the same period in 2022 and above the average of the last 10 years.
Certified stocks on the NY stock exchange closed at 699,508 bags of 60kg on Thursday, April 20. This is the first time that the stock has fallen below 700,000 bags since the beginning of December 2022. There are no bags awaiting certification at the moment.
JULY/23: Min: 191,40 | Max: 204,90 | Last: 193,90
BRL/USD: Min: 4,9006| Max: 5,0891 | Last: 5,0410
*Data as of completion of this report.
WEATHER
In the last few days, a cold front passed through the Southeast region of Brazil and brought rain in all coffee producing areas. Although the cold air mass that accompanied the frontal system arrived with low intensity, there was a slight drop in minimum temperatures in areas such as Mogiana, Garça and the South Minas.
From now on, the forecast for rain is low due to the beginning of the dry season in all regions. The cloudiness that prevails at some hours of the day in the regions of South Minas, Matas de Minas and Mogiana is due to the maritime circulation, humidity coming from the Atlantic Ocean. According to climate models, since the El Niño phenomenon is already starting to act, the probability of frost is low.
There is no forecast of rain for the next week.
DOMESTIC MARKET and FOB
In the domestic market, there were many offers and good deals reported for short-term shipments and coverage, as well as some sales from producers for the new crop. Although prices are still mismatched between buyers and sellers, the rally of the week allowed for new deals for immediate shipment and for the new crop due to the widening of differentials. This allowed prices to get closer to the expected values for some buyers, even though it was for a limited time.
The ideas of sellers in the domestic market are as follows:
Strictly soft good cup running screen: seller close to R$ 1.130,00
Strictly soft fine cup running screen: seller close to R$ 1.160,00
Rio Minas:
Running screen with 25% low grades close to R$ 950,00
17/18 around R$ 1.060,00
14/16 around R$ 1.030,00
600 defects: close to R$ 980,00;
LOGISTICS
China recorded a 108.7% increase in coffee imports in the first quarter of this year. The Chinese purchased 185,308 bags, a volume that represents 2.2% of the total exported by Brazil, according to data from the Council of Coffee Exporters of Brazil (Cecafé).
The Brazilian coffee industry has been focusing on promoting the beverage in Chinese coffee shops, targeting the young and adventurous market, according to DATAGRO.
Fabrizio Pierdomenico, the national secretary of Ports and Aquatic Transport, is advocating for a new road access to Baixada Santista (a new road connecting the region with the Planalto). The subject was discussed at the 1st Porto & Mar 2023 meeting, promoted by the Tribuna Group on April 18. The action is focused on cost-benefit and transportation of cargo destined for the port of Santos. Empty terminals that feed exports originating from the port of Santos continue to operate with low stock, depending on the arrivals of food grade containers from imports.
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.