KCNY and Currency
The volatility in Arabica prices on the NY “ICE” continues. The week began with a downward trend in quotations, but later on, over the period, it returned to bullish movements exceeding usc 240 lb/p.
The upward movement can be interpreted as the progressive decrease in New York certified stocks, lower export flows and low liquidity in the physical local market.
The Real strengthened in relation to the dollar and in February Brazil keeps having a relevant external flow of financial resources.
• NY “ICE” certified stocks held in daily decline over the week, reaching a volume below 1,150,000 60 kg bags, the lowest volume since 2020;
• London also keeps the certified stocks going down;
• Robusta exports from Vietnam are strong, with negative differentials being negotiated. In Brazil, conilon has been traded mainly to the local industry, since in FOB quotations it is quoted at positive differentials. For the local industry, conilon has become more attractive, due to Arabica prices and the widening of the price difference between them;
• Secex (Foreign Trade Secretariat) reported that in January 2022 Brazil exported approximately 3 million 60 kg bags, a 22.16% decrease compared to January 2021.
• The Selic rate went up 1.5 points to 10.75% p.a., England also raised its interest rate and the European Central Bank has signaled an increase movement, bringing new concerns related to global inflation;
March/22: Min: 233,80 | Max: 244,30 | Last: 239,05
BRL/USD: Min: 5,2563 | Max: 5,3969| Last: 5,3330
*Data as of the completion of this report
The current rains have been good for the coffee trees and even with the significant volumes, farmers can perform cultural treatments during the rain’s intervals. It is worth remembering that the rainfall across January 2022 was within the historical average for the period.
February was rainy in all coffee growing regions. The cold front that arrived at the end of January remained partially stationary in the Southeast region. The largest volumes of rain observed in recent days were in the south of Minas Gerais and Zona da Mata regions.
A new cold front will arrive in the Southeast region after Sunday and it should bring moderate to heavy rains in the regions of south of Minas Gerais, Alta Mogiana and Garça, between Sunday and Wednesday. Starting from Wednesday, the cold front advances to Minas Gerais and it should cause moderate rains in all coffee regions of the state.
Rain forecast for next week:
- Sul de Minas region: between 100 and 150 mm;
- Zona da Mata region: between 100 and 150 mm;
- Cerrado region: between 80 and 120 mm;
- Garça region: between 100 and 140 mm;
- Alta Mogiana region: between 100 and 140 mm.
DOMESTIC MARKET and FOB
The domestic market is still with low liquidity and coffee prices remain solid. For group 1, one can see good availability in the market, however at high prices. Anyone who is willing to pay the prices of the day will find the volume that is need.
- Strictly soft good cup running screen: seller close to R$ 1.480,00;
- Strictly soft fine cup running screen: seller between R$ 1.500,00 to R$ 1.510,00;
- Rio Minas 17/18: R$ 1.500,00. Running screen with 30% low grades near to R$ 1.400,00;
- 600 defects: near R$1.370,00.
For the FOB export, there was some demand for fast shipping and mainly of certified coffees. There was also some interest in new crop differentials, but no business.
Improvements in the logistics scenario are noticed in regard of the operational aspects of shipping, whether in the removal of equipment, in the improvement of space availability for some routes, in the confirmation of reservations, and in the lower instability of prices.
However, we know that the barriers in the logistics and supply chain have not been solved. And, according to Cecafe, specialists expect the logistics to be regularized by the end of 2022.
COVID-19 IN BRAZIL
Cases of COVID-19, with the new Omicron variant continue to be on the rise, the moving average of new cases in the last 7 days was at 188,116.
People who received the first dose: +166.031.141 (77,29% of the population)
People fully vaccinated: +150.625.718 (70,11 % of the population)
Cases: + 26.099.735 million
Let’s continue believing and investing in the coffee culture!
Atlantica Coffee Team
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