KCNY and Currency
The week was marked by the geopolitical tensions that led to Russia bombing cities in Ukraine. The commodities market already demonstrates the fears in relation to the war, just as investors show aversion in risky assets.
NY “ICE” on Thursday had a sharp drop and the Real, which accumulated important appreciations, has weakened yesterday against the dollar after the beginning of the conflict.
• Last Thursday morning, Russia bombed Ukraine, an action that was repudiated by several countries and by the UN and NATO for hurting Ukraine’s sovereignty;
• Commodities such as corn, wheat, natural gas, and oil have closed higher due to the tensions in the region and the representation of Ukraine and Russia in relation to production and flow;
• Fertilizers are already accumulating new important increases because of the war, since Russia is one of the main producers of the inputs. The hikes may impact the production costs of several agricultural products since Brazil imports about 80% of the fertilizers it uses;
• The Arabica coffee had an significant devaluation of almost 4% and the robusta of almost 3% on the last Thursday, according to Haroldo Bonfá from Pharos Consulting there is a concern with the grain consume, since in times of war the population concentrates on the consumption of essential materials;
• Russia is an important consumer of Brazilian green coffee and the second largest importer of soluble coffee from Brazil;
• NY “ICE” certified stocks keep falling, closing at 980,562 60kg bags on Thursday;
• The war brings an environment of risk and concern for humanity and for global economies that have not yet recovered from the effects of COVID-19, the global logistics crisis and inflationary hikes;
May/22: Min: 237,25 | Max: 251,95 | Last: 241,35
BRL/USD: Min: 4,995 | Max: 5,1621 | Last: 5,1179
*Data as of the completion of this report
WEATHER
The rains decreased this past week with the weakening of the South Atlantic Convergence Zone, which acted from February 1st to 20th. For the last days of February and the first days of March, a continental warm air mass is expected in all coffee regions.
Temperatures should not exceed the averages for the period of the year. The heat combined with high humidity could organize isolated rain showers in the afternoon, typical for this time of the year. New cold fronts are not expected in the coming days.
Rain forecast for next week:
- Sul de Minas region: between 20 and 30 mm;
- Zona da Mata region: between 10 and 20 mm;
- Cerrado region: between 10 and 15 mm;
- Garça region: between 10 and 15 mm;
- Alta Mogiana region: between 20 and 30 mm.
DOMESTIC MARKET and FOB
The domestic market slowed down mainly due to the appreciation of the Brazilian Real and important drops in the NY “ICE”. Few businesses reported in the week.
- Strictly soft good cup running screen: seller close to R$ 1.420,00;
- Strictly soft fine cup running screen: seller close to R$ 1.470,00;
- Rio Minas 17/18: R$ 1.470,00. Running screen with 30% low grades near to R$ 1.400,00;
- 600 defects: near R$1.370,00.
For FOB export, there were some important demands of up to 2 crops and for fast shipment.
LOGISTICS
The logistics scenario is still fragile. The stock of food standard equipment remains at a critical level, which has caused constant delays. Before the attacks of Russia, some shipping agents expected significant improvements for the second half of the year, but some shipowners (Hapag Lloyd and CMA CGM) have already announced the interruption of confirmation of new bookings for Ukraine.
New bookings will be possible only for mid/late March, but still with restricted space and schedules. US and European ports present more critical situation, with many requests for booking declined.
HSUD and MSC have been the most successful shipowners in obtaining bookings, but the actual shipment will still depend on the availability of food-standard equipment.
COVID-19 IN BRAZIL
People who received the first dose: +172.077.436 (80,1% of the population)
People fully vaccinated: +154.515.728 (71,93% of the population)
Cases: + 28.580.995 million
Deaths: 647.486
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