NYSE and BRL/USD
KCNY prices fell again as profit-taking took place after the previous week’s highs, the significant appreciation of the dollar globally, no frosts forecasts in Brazil, the increase of 12% in the ICO surplus estimate and the devaluation of the Brazilian Real by 4% in relation to the previous week.
While agricultural commodity prices fell more sharply, solid Arabica fundamentals, such as concerns about the crop and weather in Brazil, provided further firmness to the KCNY.
The September/21 contract ended Friday quoted at 153.05/USC/lb, a retreat of 155 points from the previous week’s adjustment.
September/21: Minimum: 147.65 | Maximum: 153.85 | Last: 150.85 USC/lb
BRL/USD: Min: 5.044| Max: 5.3139 | Last: 5,2393
*Data as of the completion of this report
According to Somar meteorologia, rainfall in Minas Gerais last week was only 2% of historical average. The water crisis in Brazil also affects the reservoirs of hydroelectric plants, significantly raising the cost of energy in the country.
Representatives of producers in Alta Mogiana and southwest Minas reported estimating 20 to 25% losses in productivity (production/area) in the 22/23 harvest due to frostbite or temperatures below 10º C recorded last week. There is no frost forecast for next week and the weather should remain dry and cold.
DOMESTIC MARKET and FOB
The domestic market was not very active with the price drops and the involvement of the producer with the harvest and preparation. Coffee growers this week were especially attentive to the conditions of the crops after the previous week’s cold front and many believe in new price highs, given the combination of drought, cold front and negative biennial. Arabica new crop prices varied between R$780 to R$820/bag on average for the bebida dura type 6/7, depending on the region. There was an increase in the FOB demand this week.
Producers in the Zona da Mata are already making future deliveries, a region where harvest is close to 60%. For the other regions, it is estimated 25 to 30% already harvested in Sul de Minas, 25% in Mogiana and 20% in Cerrado, but the samples have not reached the market yet. In general, the harvest this year is a little later than in previous years, but continues to be favored by dry weather and without labor difficulties.
There was no improvement in the logistics scenario this week, which continues with a shortage of containers, many roll-overs and lack of space on vessels. It is worth noting:
- Logistics bottlenecks significantly impact the flow and costs of coffee shipments in major Arabica and Conilon producing countries such as Brazil, Colombia and Vietnam;
- There has been greater difficulty in securing containers with Hapag Lloyd, CMA CMG and Evergreen;
- Destinations Japan and Europe are also already committed until August;
- Requests for US and Canadian ports continue to be rejected by shipowners, due to service restrictions.
The flow of coffee shipments increases in the second half of the year, when difficulties may become even greater and result in delays in shipments.
We request support from customers in contacting the shipowners to guarantee space and containers for the contracted freights and to send shipping instructions in advance.
COVID-19 IN BRAZIL
The moving averages of deaths and cases are falling in Brazil. This week the country registered a vaccination record and more than 3,390 million doses were applied in 24 hours.
- People who received the first dose: 81.9 million (36.68% of the population)
- Fully vaccinated people: +29.442 mi (13,9% of the population)
- Cases: + 18.962 million
- Deaths: + 530,000
Let’s keep believing and investing in the coffee culture!
Atlantica Coffee Team