KCNY and Currency
During the week, the NY “ICE” market maintained a predominantly bullish movement. At the beginning of the week, the H3 arbitrage against BMF hit -3.5, showing the widening of differentials. After the release of US economic data for inflation, which came in lower than expected, the dollar index retreated, and commodities strengthened. The Real remained unstable, with a tendency to depreciate against the dollar, due to the uncertainty in the Brazilian political/fiscal scenario.
- This week Cecafé released the number of Brazilian coffee exports in November 22. A total of 3.673 million 60-kg bags were exported, an increase of 14.2% compared to November 21. In the sum between July and November, Brazil exported 1.7% more than in the same cycle in 2021.
- During the week, Hedgepoint released its initial estimate for the 23/24 crop, within the range presented, 66.9 million 60-kg bags would be the midpoint. The brokerage Pine Agribusiness also released its estimate at 54.36 million 60-kg bags. On previous estimates released we have Ecom with 76.6 million bags (but they are reviewing the figures) and Rabobank with 68.5 million 60 kg bags, and others, showing that estimates for the new crop have much divergence among the various players.
- Atlantica Coffee and the GMT have not released estimates for the 23/24 harvest. Our technical team is in the field finishing the post-flowering evolution and the expectation is to release the first figures in February. In any case, our team sees an average increase in the production area of the main producing regions as well as an expected increase in the average yield of the crops.
- The NY “ICE” certified stock closed Wednesday at 743,010 60 kg bags;
MARCH/22: Min: 154,55 | Max: 173,80 | Last: 170,15
BRL/USD: Min: 5,2329 | Max: 5,3717 | Last: 5,3170
*Data as of completion of this report.
WEATHER
The cold front that arrived in the brazilian Southeast region last Tuesday caused significant rainfall for all coffee regions. Due to the drop in atmospheric pressure from the coast of the Southeast region of Brazil, the frontal system gains intensity at the end of the week and should leave the weather cloudy and with rains in the next few days in the coffee regions of Zona da Mata and Cerrado. In the other coffee regions, the heat combined with high humidity could cause isolated afternoon rains, typical for this time of the year.
Rain forecast for the week:
South Minas region: between 80 and 100 mm.
Zona da Mata region: between 80 and 100 mm.
Cerrado region: between 10 and 20 mm.
Alta Mogiana region: between 10 and 20 mm.
Garça region: between 10 and 15 mm.
DOMESTIC MARKET AND FOB
The FOB market continued with low liquidity during the week. There were occasional demands for coverage of positions sold in January and February 2023, however, the importer maintains low interest in paying replacement prices, even if for coverage of urgency. In the domestic market, the market is more active and with a good volume of supply and business reported, but the producer does not give up the high prices when negotiating.
Strictly soft good cup running screen: close to R$ 1.030,00
Strictly soft fine cup running screen: close to R$ 1.060,00
Rio Minas:
17/18: R$ 1.070,00
14/16: R$ 1.030,00
Running screen with 30% low grades: close to R$ 950,00
600 defects: close to R$ 960,00;
LOGISTICS
We had another week with stuffing hampered by the shortage of food-grade containers.
Due to the approaching year-end, some importers are focused on completing shipments for 2022, opting to booking it in the spot market, due to lack of allocation in longer negotiations.
Cargoes allocated for shipment at the Port of Itaguaí-RJ continue to be delayed, due to traffic congestion.
COVID-19 IN BRAZIL
People who received the first dose: +182.396.458
Fully vaccinated people: +172.353.406
Cases: + 35.823.734
Deaths: 691.632 thousand
Atlantica Coffee Team