KCNY AND CURRENCY
Coffee prices on the New York Stock Exchange continue at an uncertain pace. The week began on a high note, following news of minimal frost in some producing regions of Brazil, and on Tuesday the market gave back the gains. However, at the end of the week it returned to high levels due to fears about the supply and expectation of the weather and its impact on the plant in the coming months. As a result, the market had a low of 228.30 and a high of 246.40, fluctuating by 1810 points, and ended the week on a high again, quoted at 244.10 for December/24. With the SEP X DEC rollovers coming to an end, the December/24 maturity is confirmed as the most liquid, currently with 95,933 lots open. Next Thursday, the 22nd, the delivery period for the September/24 maturity begins.
Prices for the December/24 expiry date since 01/01/24. Source: Barchart.
In foreign exchange, the dollar is falling, oscillating between R$5.4281 and R$5.5231 this week. The American currency is losing strength in the face of expectations of a reduction in American interest rates in the coming months, while in the domestic scenario it is expected that the Selic rate will be maintained or even increased, which will help strengthen the Real.
Hedgepoint Global Market revised its figures for the 2024 Brazilian crop, estimating that production should reach 63.3 million 60kg bags. The previous forecast was 66 million bags. During the week, Cecafé also released a summary of July/24 exports, which totaled 3.774 million 60kg bags, representing an increase of 25.7% compared to the same period in 2023.
The Commodity Futures Trading Commission (CFTC) released on Friday (16) a report on the positioning of Traders in the market for the week ended Tuesday (13), who reduced their net long balance for the fifth week in a row by 921 lots, showing a long balance of 38,960 lots, compared to the previous balance of 39,881 lots on August 6.
Certified stocks ended this Friday (16) at 836,921 60 kg bags, with 25,509 bags still pending approval. Brazil is currently the origin with the largest volume of certified coffees, accounting for over 49% of stocks, followed by Honduras with 14%, Nicaragua with 12.64% and Peru with 10%.
December/24: Min: 228.30 | Max: 246.40 | Last: 244.10
BRL/USD: Min: 5.4281 | Max: 5.5231 | Last: 5.4678
*Data as of the completion of this report
WEATHER
The cold front that has passed along the coast of the Southeast in recent days has organized light rains in some municipalities in South Minas, Zona da Mata and northern Espírito Santo.
The next few days will be marked by a lack of rain and temperatures above the historical average in all coffee-growing regions. The hot air mass is expected to organize a heat wave between the states of Minas Gerais, São Paulo, Goiás and Mato Grosso do Sul.
No rain is forecast for the week.
DOMESTIC MARKET AND FOB
The sharp fluctuations in coffee prices on the NY ICE have a direct impact on prices on the domestic market, leaving prices between buyers and sellers far apart and making some deals difficult. However, according to buyers’ needs, some volume was traded, taking advantage of market movements. The harvest is practically over in all of the country’s producing regions. On the FOB market, the week was very quiet in terms of demand, with buyers making quotes for future shipments and still finding firm differentials on the part of sellers, even though they had expected some easing with the rises on the NY ICE. The difference between big and small beans is still around 10 cents per pound or more for all qualities. Some fixed-price Rio Minas deals for short-term shipment were reported.
The requests from sellers in the domestic are as below:
- Strictly soft good cup running screen around R$ 1,400.00
- Strictly soft fine cup running screen around R$ 1,450.00
- Rio Minas running screen around R$ 1,180.00
- 600 defects was quoted at R$ 1,300.00
LOGISTICS
For yet another week we haven’t had any schedules canceled due to a lack of equipment, although some releases have been delayed, requiring rescheduling.
We would like to point out the fierce competition for space on ships, especially on services to North America. The allocation of some contracts, negotiated abroad and used in FOB operations, is already fully utilized by mid-October.
- In the first seven months of the year, Brazil shipped a total of 28.1 million bags of coffee, a record volume for the period. This figure represents an increase of 46.3% compared to the same period last year, according to Cecafé.
- According to the Portos e Navios portal, as of August 21, ships heading for the Port of Santos will need to present a certificate of compliance with international ballast water disposal standards. Without this document, they will not be able to dock. The measure, implemented by the Santos Port Authority (APS), aims to combat bioinvasion by exotic species, which threatens marine life and negatively impacts coastal communities, including in Brazil.