KCNY and Currency
There were still oscillations in the exchange rate and NY “ICE” this week. Overall, the market readings expect that volatility will remain, with this being the only constant in view of the uncertainties about the real size of the harvested crop in 22/23, concerns about the lack of rainfall and its impact on the 23/24 crop, new lockdown in China, the continuity of recession and inflation in major economies and the loss of the purchasing power of the Euro, which directly impacts the products imported by the continent.
- On Thursday, Brazil’s second quarter GDP (Gross Domestic Product) was released, showing a 1.2% increase over the first quarter, placing the country in the 12th best performance of the period when compared to the 50 other countries that have already released their GDP;
- China announces a new lockdown in Chengdu, a city with 21 million people, despite the recent results of its GDP that are well below the projected by the government for the semester. This retraction comes from the lockdown to contain new waves of COVID-19 that impacted industrial activity and consumer spending;
- According to CEPEA (Center for Advanced Studies in Applied Economics), the price increases in recent coffee quotations reflect concerns about the 23/24 harvest. This is because the rains in August led to early blooms that may fail due to the dry weather of this season;
- Also, according to the CEPEA indicator, Arabica coffee type 6 placed in São Paulo capital closed at R$ 1,342.78 a 60kg bag, which represents an increase of 2.68% compared to the previous Tuesday;
- The NY “ICE” certified stock closed Thursday at 670,681 60-kg bags;
- According to a report by consultancy Safras & Mercados, the 22/23 harvest is 98% complete. Also, according to the consultancy, 59.9 million 60kg bags were harvested against an estimated 61.1 million 60kg bags;
DECEMBER/22: Min: 230,00 | Max: 239,55 | Last: 231,80
BRL/USD: Min: 5,0108 | Max: 5,2573 | Last: 5,2090
*Data as of the completion of this report
WEATHER
The cold front that passes along the coast of the Brazilian Southeast region on Sunday should only increase cloudiness in some coffee regions, but no rain is expected. The new cold front that will form between Tuesday and Wednesday between the South and Southeast regions of Brazil should bring rain, but only in the region of Garça.
The weather forecast models show that rainfall in September should be below the historical average and temperatures between 3 and 4 degrees above average.
Rain forecast for the week:
Garça region: between 20 and 30 mm
For the other regions there is no rain forecast.
DOMESTIC MARKET and FOB
The FOB market is moving at a slow pace and negotiations have been limited to the urgent needs of buyers. Over the week, the domestic market showed some business mainly at times when the devaluing Brazilian Real favored purchase prices.
Strictly soft good cup running screen: seller close to R$ 1.300,00
Strictly soft fine cup running screen: seller close to R$ 1.350,00
Rio Minas: Running screen with 30% low grades: close to R$ 1.080,00
600 defects: no buyer or seller over the week;
LOGISTICS
In the international scenario, the sharp drop in freight rates for immediate shipment in some routes seems to be a reflection of a downturn in some markets. About 8.8% of the transport capacity from the Asian to the European market should be withdrawn by shipowners during the next 12 weeks, for example, the shipowner CMA CGM has announced the cancellation of five voyages close to the Golden Week in China, removing about 100,000 containers between Asia and Europe.
Regarding the bottlenecks at major northern European ports, which have been much in evidence in logistics commentary in previous weeks, there has been relief in the face of a combination of labor availability and reduced Asian imports. In addition, a salary agreement last week at German ports should also ease the high yard density at Hamburg terminals.
In the United States cancellations, queued ships and high warehouse prices show that U.S. ports are still congested even with the volume of containers coming from China much lower than usual. The congestion that was most severe in the ports of the American West has spread to other ports in the country.
Once again, in Brazil, the low stock of standard food equipment has affected shipments, blocking scheduled shipments and leading some shipowners to cancel bookings.
The main routes from Brazil to North America, Europe and Asia already have restricted space on ships from September until the beginning of October. Some routes are even without space for the entire month of October, depending on the contractual allocation of the negotiation. We reiterate the need to send shipping instructions in advance and, whenever possible, with more than one carrier option.
COVID-19 IN BRAZIL
People who received the first dose: +180.807.902
Fully vaccinated people: +170.159.432
Cases: + 34.492.171 million
Deaths: 684.203 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