KCNY and Currency
The week was slightly shorter for coffee quotes on the NY stock exchange, as Monday (19) was a holiday in the US and marked the start of the delivery notification period for the March/24 expiry period. Notifications began on Wednesday (21) and the H4XK4 spread reached a high of +10.95 for rollovers. In the first two days of delivery notification 642 lots have already been notified.
On the May/24 expiration date, currently the most liquid, prices were between 179.50 and 190.20 cents per pound. The market worked at higher levels until Thursday morning and then started to move in the opposite direction. In terms of fundamentals, good rains since the beginning of 2024 so far for producing regions and good expectations for the 24/25 harvest have contributed to this movement. Stonex released its estimate of Brazilian production for the 24/25 harvest, where it recorded an expected increase of 4.2% against the previous cycle. Estimated production was 44.3 million bags of arabica and 22.7 million bags of robusta.
The dollar was quoted between R$4.9190 and R$4.9977 this week, as indicators from the US economy reinforced the expectation that the FED (US central bank) should wait a little longer before starting to reduce interest rates in the country.
Investment funds continue to increase their net long positions in coffee contracts in NY. On Friday (16), the Commodity Futures Trading Commission (CFTC) released a report on the position of traders in the market for the week ended Tuesday (13), in which funds increased their long position to 38,062 lots, against a previous balance of 34,940.
Certified stocks of coffee on the NY ICE closed this Friday (23rd) at 324,157 bags of 60 kgs. There are currently 127,421 bags of coffee awaiting approval, of which 113,402 are of Brazilian origin.
MAY/24: Min: 179.50 | Max: 190.20 | Last: 180.30
BRL/USD: Min: 4.9190 | Max: 4.9977 | Last: 4.9935
*Data up to the finalization of this report
WEATHER
The cold front that arrived in the Southeast on February 14 intensified due to the formation of low pressure on the coast between Espírito Santo and Bahia. In recent days, there has been heavy rainfall in the northern regions of Espírito Santo, southern Bahia, Zona da Mata, South Minas and the Cerrado.
The same cold front is dissipating off the coast of the Southeast as of this Saturday, and the forecast for the next few days is for isolated rainfall in the coffee-growing regions of Garça, Mogiana, South Minas and Cerrado.
Rain forecast for the week:
South Minas region: between 20 and 30 mm.
Zona da Mata region: between 10 and 20 mm.
Cerrado region: between 20 and 30 mm.
Alta Mogiana region: between 20 and 30 mm.
Garça region: between 20 and 30 mm.
DOMESTIC MARKET and FOB
In the physical market, the bases of buyers and sellers remain out of sync, even though there are many offers, producers remain firm in their bases. Some deals were reported at the beginning of the week according to buyer’s needs, but with the downward movements in NY on Thursday and Friday, negotiations slowed down. On the FOB, most orders are for upcoming shipments, where several exporters already have their positions compromised.
The requests from sellers in the domestic are as below:
Strictly soft good cup running screen: seller around BRL 1,010.00
Strictly soft fine cup running screen: seller around BRL 1,060.00
Rio Minas: Running screen with 25% low grades around BRL 900.00
600 defects: around BRL 900.00
LOGISTICS
- On Friday (16), the Santos Port Authority (APS) signed the Technical Cooperation Agreement (ACT) for the construction of the Santos-Guarujá Tunnel, in partnership with the Federal Government, represented by the Ministry of Ports and Airports (Mpor), and the São Paulo state government. This initiative aims to facilitate transit between the two shores of the port of Santos, which are home to port terminals operated by different shipping companies. The tunnel is expected to optimize port logistics and promote greater efficiency in maritime operations by connecting the left and right banks, improving integration between the terminals and speeding up cargo transport.
Stuffing schedules for ships operating in the Port of Santos have once again been negatively impacted by the lack or late release of containers. Changes to deadlines and gate openings, which reached a record level in January, also persist.
Ships leaving in the next 4-6 weeks are still not restricted in terms of new bookings.
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.