KCNY and Currency
The Carnival in Brazil and the holiday in the US made the week shorter, but still busy. The market in NY had a strong increase on Tuesday and Wednesday, which also boosted the spreads. The news remains the same: a decrease in certified stocks and exports around the world. The rains in Brazil are still intense, which is a bit worrying due to excessive humidity and lack of sunshine, which can lead to diseases and complications in crop management. However, the rains increase the water availability in the soil, which is positive for 2024.
In the macroeconomic scenario, American inflation continues to give signs that it is not decreasing as expected, which may lead the FED to adopt a more rigid stance in the next meetings, possibly raising interest rates at a faster pace than predicted. This week marked one year of war between Russia and Ukraine, which continues to show no signs of improvement in the scenario, something that affects several sectors of the global economy.
In Brazil, the Real strengthened against the Dollar due to the exchange flow and a moment of calmness in the presidency’s criticism against the Central Bank. However, like in the US, Brazilian inflation is gaining strength again, indicated by the higher IPCA increase than expected by the market.
MARCH/23: Min: 183,30 | Max: 194,15 | Last: 188,15
BRL/USD: Min: 5,1088 | Max: 5,2124 | Last: 5,1880
*Data as of completion of this report.
WEATHER
A mass of warm air is currently affecting all regions in the Southeast of Brazil, making it difficult for cold fronts to move in and causing isolated storms between the states of São Paulo and Minas Gerais. As a result, there has been a break in rainfall over the past few days in the coffee-growing areas. However, a new cold front is expected to arrive on the São Paulo coast on Monday and could bring moderate rain throughout the week to the coffee-growing regions of Mogiana and South Minas.
Rain forecast for the week:
South Minas region: between 40 and 50 mm.
Zona da Mata region: between 10 and 20 mm.
Cerrado region: between 10 and 20 mm.
Alta Mogiana region: between 40 and 50 mm.
Garça region: between 10 and 20 mm.
DOMESTIC MARKET and FOB
During the short week after Carnival in Brazil, the FOB market continues to have demands for the new crop, just like last week. In the domestic market, supply remains high, but prices are still expensive, creating a widening gap between expectations and reality.
Strictly soft good cup running screen: seller close to R$ 1.170,00
Strictly soft fine cup running screen: seller close to R$ 1.200,00
Rio Minas:
Running screen with 30% low grades close to R$ 1.030,00
17/18 around R$ 1.100,00
14/16 around R$ 1.075,00
600 defects: close to R$ 1.030,00;
LOGISTICS
Data from the Foreign Trade Secretariat (Secex) released yesterday (Feb 23rd) indicated a sharp decline in coffee exports in Brazil in February 2023 compared to the same month in 2022. The daily average, calculated up to the 3rd week, was 6,000 tons (100,000 60-kg bags), compared to 10,960 tons (182,660 bags) for the entire month of February last year. Despite the short week due to the Carnival break, there were no delays or cancellations due to container shortages, as well as no significant rejection 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.