KCNY AND CURRENCY
Coffee prices on the NY exchange ended the week down, at 244.05 on the December/24 expiration date, after a week of extreme volatility and very high levels on the NY ICE. The market remains bullish and at the start of the week prices reached their highest levels in more than two years, reaching 259.45, but this Friday the market reached a low of 242.55, after a lot of intraday volatility, and ended down.
One of the main factors contributing to this bullish market is the weather, which continues to be a cause for concern in Brazil’s producing regions due to the lack of rainfall; with the arrival of September, coffee trees are expected to bloom, but rain is necessary for good setting. In addition to the weather in Brazil, the main arabica producing country, the situation in two of the biggest Robusta producers, Vietnam and Indonesia, is still on the radar, so that movements on ICE LONDON have a direct impact on prices on NY ICE, and Robusta prices continue to break records. The KCZ4 x LDNX24 arbitrage was quoted at -17.
Next Monday (02) there will be a break for market players with the American Labor Day holiday, and there will be no coffee quotes on NY ICE.
Prices for the December/24 expiry date since 01/01/24. Source: Barchart.
In foreign exchange, the instability of the dollar has also been a certainty. During the week, the dollar was quoted between R$5.4730 and R$5.6919, with the American currency appreciating, after American indicators such as GDP for the second quarter and requests for unemployment aid helped to lower expectations of a more aggressive interest rate cut in the country.
The Commodity Futures Trading Commission (CFTC) released this Friday (30) a report on the positioning of Traders in the market for the week ended Tuesday (27), reporting a decrease in their long balance by 277 lots, showing a long balance of 43,197 lots, compared to the previous balance of 43,474 lots on August 20.
Certified stocks ended this Friday (30) totaling 847,873 bags of 60kgs, with 82,642 bags still pending approval, 54,057 bags more than last Friday (23). A significant part of the stock pending certification is of Brazilian origin, totaling 53,799 bags.
December/24: Min: 242.55 | Max: 259.45 | Last: 244.05
BRL/USD: Min: 5.4730 | Max: 5.6919 | Last: 5.6324
*Data as of the completion of this report
WEATHER
The cold front that recently passed along the coast of southeastern Brazil caused light rain in some municipalities in the Garça, Mogiana, South Minas and Zona da Mata regions. The mass of polar air that followed the frontal system resulted in a drop in temperatures along the Serra da Mantiqueira.
In the coming days, the hot, dry continental air mass is expected to once again predominate in all coffee-growing regions.
There is no rain forecast for the week.
DOMESTIC MARKET AND FOB
The high levels of coffee in NY and the positive fluctuations of the dollar have had an impact on prices in the domestic market and have left sellers and buyers even further apart on their bases. At times of high prices, some buyers have managed to cover positions, according to market movements, but many buyers are not aggressive in their bases, given the high prices negotiated. On the FOB, there wasn’t much demand, despite some group 1 quotes. Quotations were reported at very aggressive differentials for MTGB coffees for upcoming shipments, with increasingly open differentials between big and small beans, while for Rio Minas the bases are still very different between sellers, but there was a greater number of deals reported for shipments in the next 2 months.
The requests from sellers in the domestic are as below:
- Strictly soft good cup running screen around R$ 1,430.00
- Strictly soft fine cup running screen around R$ 1,520.00
- Rio Minas running screen between R$ 1,170.00 and R$ 1,200.00
- 600 defects was quoted at R$ 1,320.00
LOGISTICS
The restriction of space on ships departing in September and the first half of October is still a cause for concern. We would like to point out that shipping instructions need to be sent in advance and that it is advisable to negotiate more than one shipping company option.
Stocks of food grade containers of size 20′ remain at critical levels, hampering stuffing schedules. For yet another week, MSC was the most restricted shipping operator.
- The Minister of Ports and Airports, Silvio Costa Filho, signed an ordinance that facilitates the issuing of infrastructure debentures, expected to generate more than R$20 billion in the next 24 months. The measure makes the process less bureaucratic, eliminating the need for prior authorization from the Ministry, which reduces the waiting time for investments in the sector. The information is from the Portos e Navios portal.