KCNY and Currency
This was a week of volatility and important oscillations in the exchange market and in the NY “ICE”. The currency, for most of the week, compensated for the higher quotations of Arabica coffee, as the Brazilian Real appreciated against the US Dollar.
The instability of the currency was strengthened by the expectation in the speech of Jerome Powell, president of the U.S. central bank, about the interest rate path of the United States.
On Wednesday, NY “ICE” showed great appreciation, with the market closing at a high of 1,075 points. The high volume of open contracts in the September/22, after the first notice day, has brought concern to the market in relation to certified stocks, besides the many speculations regarding weather issues, last week’s flowering and the supply and demand for coffee in the world.
- According to the bank Itaú BBA, coffee prices tend to remain firm in the coming months, due to the slow commercialization of the 22/23 harvest and low stocks in destination countries. On the other hand, still according to the bank, the prices can be more flexible if there is a good flowering of coffee.
- According to CEPEA (Center for Advanced Studies in Applied Economics) the prices of conilon coffee are being boosted mainly by two factors: the increase in the external quotations of Robusta coffee and the increase in its demand, that is, the increase in its participation in the blends of the local industry, due to the substitutions that are consequence of the significant increases in Arabica coffee prices.
- According to our country team, the harvest of the 2022-23 crop reached 97.4% last weekend, 4.2% above the historical average. The conilon harvest has ended and the Arabica harvest reached 91.7%, which is 6.6% above the historical average due to the good pace;
- The NY “ICE” certified stock closed Thursday at 660,077 60 kg bags.
- Cooxupe, the largest coffee cooperative in Brazil, stated to Reuters, that there will be a decrease in the Arabica coffee production compared to previous forecasts presented for the crop year. However, it did not detail the percentage of reduction. The main causes of this decline would be climatic factors such as drought and frost in 2021;
DECEMBER/22: Min: 210,80 | Max: 242,95 | Last: 237,60
BRL/USD: Min: 5,0697 | Max: 5,2039 | Last: 5,0970
*Data as of the completion of this report
WEATHER
There were no rains this August in the Zona da Mata and Cerrado regions. The cold fronts that have passed along the coast of the Brazilian Southeast region have brought light rains in some cities in the Garça, Sul de Minas and Mogiana regions. The weather models show that rainfall will continue to be below average in all coffee regions in September.
The cold front that will move through the coast of the Southeast region at the beginning of the week should not bring rain to the coffee regions.
There are no rains forecasted for the week.
DOMESTIC MARKET and FOB
FOB market is very slow, buyers of Rio Minas quality showed some interest over the week. For group 1, in general, the market tries to understand where the global demand is. In the local market, the buyer interest continues to be high, some businesses were reported over the week as the quotes favored the seller’s prices.
Strictly soft good cup running screen: seller close to R$ 1.330,00
Strictly soft fine cup running screen: seller close to R$ 1.375,00
Rio Minas: Running screen with 30% low grades: close to R$ 1.070,00
600 defects: close to R$ 1.210,00
LOGISTICS
Shipowners continue to decline new bookings requested for September ships. Shipments destinated for Europe and North America (mainly ports on the east coast of the USA) are already restricted on ships in early October.
Hamburg Sud and CMA CGM have shown more difficulty in releasing containers, requiring rescheduling of some shipments. And MSC cancelled old bookings from several exporters due to space restrictions and contractual allocation.
COVID-19 IN BRAZIL
People who received the first dose: +180.629.980
Fully vaccinated people: +169.974.408
Cases: + 34.348.213 million
Deaths: 683.328 thousand
Let’s continue believing and investing in the coffee culture!
Atlantica Coffee Team
FRAUD ALERT
Fraudsters have created accounts at the domains atlanticacoffeee.com (with 3 letters “e”), atlanticacoffees (plural) and atlantlcacoffee (using the lowercase of L instead of the letter i) and for the prefixes using the names of our employees, even imitating our signatures. They are quoting coffee, issuing invoices with altered payment data, mostly to banks in Hong Kong, which we are not ours! Please be aware of the sender of the messages and always question instructions to change bank details!
Our only official e-mail domain is: atlanticacoffee.com