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Weekly report – Brazilian Coffee Market – February 13th ~ 17th 2023

by Feb 17, 2023Market report0 comments

KCNY and Currency

This week was marked by the closure of the March expiration in NY, which is now entering the physical delivery phase. Important data was followed during the week, such as the GCA number (American stocks) showing a drop of 112.9 thousand bags, a larger fluctuation than the average for the period, however, the stock remains above the 10-year average. 

Pending ICE certificate stocks were cleared out and the available volume begins to decrease. Weekly variation of 34.05 thousand bags ending on Thursday at 840.6 thousand bags. The CFTC still has no estimate of when it will present the participants’ position after the cyber-attack suffered three weeks ago. 

Inflation data in the US shows a worsening trend, where the PPI (Producer Price Index) showed numbers above what the market expected. This, combined with employment data, shows that the US economy remains strong even with increasing interest rates. As a result, international stocks and commodities fell and future interest rates rose, with expectations of further increases in the US interest rate. In Brazil, the market continues to follow the clash between the executive power and the Central Bank over the local interest rate. 

MARCH/23: Min: 173,85 | Max: 183,5 | Last: 180,85 
BRL/USD: Min: 5,1275 | Max: 5,2598 | Last: 5,2100 
*Data as of completion of this report.  

WEATHER

In the first half of February, rainfall in the coffee-growing regions of Garça and Mogiana remained around the historical average for the month, as expected. Cold fronts that arrived in the Southeast region were blocked by a warm air mass that had settled in Minas Gerais since the end of January. 

For the second half of the month, forecasts indicate significant rainfall in the regions of Mogiana and Garça. Additionally, at the end of the month, models indicate that a cold front may bring moderate rain to the South Minas, Cerrado, and Zona da Mata regions. 

Rain forecast for the week: 

South Minas region: between 20 and 30 mm. 

Zona da Mata region: between 20 and 30 mm. 

Cerrado region: between 10 and 20 mm. 

Alta Mogiana region: between 40 and 50 mm. 

Garça region: between 50 and 60 mm. 

DOMESTIC MARKET and FOB

The domestic market shows more fluidity in all regions. The increase in NY “ICE” impacted prices, bringing a lot of on-the-counter offers. For Rio Minas, negotiations remain a bit stalled due to price factors. 

In the FOB market, there is demand for new crop strings, sales for immediate shipment, and certificates. Many quotes and some reported transactions. 

Strictly soft good cup running screen: seller close to R$ 1.120,00
Strictly soft fine cup running screen: seller close to R$ 1.180,00
Rio Minas: 
Running screen with 30% low grades close to R$ 1.000,00;
17/18 around R$ 1.150,00
14/16 around R$ 1.120,00.
600 defects: close to R$ 1.020,00;

LOGISTICS

Brazilian coffee exports in the month of February (up to 02/12) total 817,007 60-kilogram bags, with revenue reaching $176.363 million. The average daily revenue is $22.045 million, which is 49.4% lower compared to the daily average in February 2022 ($43.588 million), according to data from Secex. 

According to the MoneyTimes portal, owners of recently arrived or upcoming cargo to the Port of Iskenderun – Turkey’s main port – are being advised by shipping agencies to change their route to other destinations. Some ship owners are even waiving contractual fees for route changes. Since the earthquake on February 6th, the terminal has been shut down, and there is no forecast for when operations will resume, according to the Project44 platform for monitoring global supply chains.  There was no significant restriction on food-grade container this week, but ships for the first half of March are already experiencing allocation restrictions.

Atlantica Coffee Team

Disclaimer: 

This analysis report aims only to provide information about the coffee market, based on internal and public sources, valid at the time of its dissemination. It does not aim to guide recipients in making any decisions, which are therefore solely the responsibility of the recipient. Atlantica Coffee is exempt from any liability arising from direct or indirect losses.