KCNY and Currency
- Over the week, NY “ICE” maintained a predominant upward movement. This is mainly a reflection of the low liquidity in the face of short-term demands, revision of the size of the 23/24 crop by some market participants, continued decrease in production in Central American countries and Colombia and the high differentials in Brazil that make new business unviable.
- At the same time, even though inflation in major consumer countries is high, global risk has improved, bringing opportunities for consumption growth, which also favors commodities. This week, marked by highs in NY, also brought back the inverted spreads, which reflect the perception of increased short-term demand in the consuming countries.
- According to a report by the Commoditiy Futures Trading Commission (CFTC) on January 20, funds increased their short position to 43,940;
- The NY “ICE” certified stock closed Wednesday at 870,722 bags;
- US GDP data came in slightly better than expected, easing recession fears and giving markets optimism;
MARCH/23: Min: 154,50 | Max: 170,15 | Last: 169,25
BRL/USD: Min: 5,0567 | Max: 5,2199 | Last: 5,0960
*Data as of completion of this report.
WEATHER
As expected, January’s rains were slightly above the historical average in almost all coffee-growing regions. 67% above the historical average in the regions of Zona da Mata and Southern Minas. It rained almost twice as expected in the Cerrado region, and 37% above the average in Mogiana. Only in the Garça region the precipitation fall below the average, with 67% of the expected precipitation for the month.
The week will be of light rains in all coffee-growing regions, and the highest volumes should occur in the Mogiana, South Minas and Garça regions. There is no forecast of new cold fronts acting in the regions in the next few days.
Rain forecast for the week:
South Minas region: between 20 and 30 mm.
Zona da Mata region: between 10 and 15 mm.
Cerrado region: between 10 and 15 mm.
Alta Mogiana region: between 20 and 30 mm.
Garça region: between 10 and 20 mm.
DOMESTIC MARKET and FOB
The market, in general, remains locked as last week, with low liquidity due to the price offered on the counter. Expectations versus reality of prices are still far apart and replacement is still difficult to meet the FOB demands, where there is still demand for immediate shipments, but far from reality.
Rio Minas coffees are difficult to do business with, mainly due to the difficulty of replacement. At some points this week, the supply of this coffee on the domestic market was practically non-existent.
Strictly soft good cup running screen: seller close to R$ 1.050,00
Strictly soft fine cup running screen: seller close to R$ 1.100,00
Rio Minas:
Running screen with 30% low grades close to R$ 920,00;
17/18 around R$ 1.050,00
14/16 around R$ 1.020,00.
600 defects: close to R$ 950,00;
LOGISTICS
Once again, ship carriers are reporting a shortage of food grade containers, which has resulted in some cancellations of shipping schedules. The scheduled departures of ships for the first half of February are already restricted, which is also resulting in a decline in new reservations for this period.
Maritime freight in the spot market continues to be more competitive compared to long-term negotiations, approaching the levels practiced before the pandemic.
On Monday (01/23), the National Confederation of Industry (CNI) and the Argentine Industrial Union (UIA) signed a joint statement suggesting priority actions to advance the bilateral and regional economic and commercial agendas.
According to data compiled by the Market Intelligence department of the Brazilian Arab Chamber of Commerce, Brazil’s exports to the Arab League reached a record revenue of US$17.74 billion in 2022, representing the best result in the series that began in 1989, and an increase of 23.06% over 2021, with a high prevalence of agricultural products.
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.