KCNY and Currency
In the first week of July, coffee prices on the NY stock exchange continued to rise, even though it was a shorter week due to the American Independence holiday on July 4th. The holiday was only for arabica, while robusta (U4) rose by +2.28%, driven by uncertainties over the supply of Vietnam’s crop due to the weather. Due to the rise in robusta on the holiday, the arabica contract, KCU4, opened Friday already up +4.30 c/lb at 228.50 and reaching the week’s high at 233.05. This Friday’s settlement stood at 228.95 compared to 226.80 last Friday, accumulating a rise of 0.94% over the period.
Prices for the September/24 maturity since 01/01/24. Source: Barchart.
On the foreign exchange front, the dollar has been unstable due to political and economic tensions in Brazil. Monday saw a significant rise of 1.11% due to the fiscal uncertainties and the expectation of an increase in the Brazilian interest rate to contain the movement of the dollar. However, on Wednesday the President emphasized his commitment to fiscal responsibility, after which the Finance Minister announced the approval of a spending cut of R$25. 9 billion, calming the market.
This week, the domestic scenario was much more important, with little external data scheduled. One of the few highlights was Payroll, released on Friday, indicating that more jobs were created in June than expected. As a result, the Fed will have to wait for more solid data before making a new decision on US interest rates.
On Friday (28), the CFTC released its market positioning report. Reversing the continuity of two weeks, there was an increase in the long balance of speculative funds by 4,392 lots, ending the week with a balance of 47,713 compared to 43,321 the previous week. The new report is due to be released this afternoon, July 5th.
Certified stocks increased by 0.5% compared to last week’s total, ending Friday (05/07) at 811,359 bags, with 51% of this volume being of Brazilian origin. Pending imports stood at 33,114 bags.
SEPTEMBER/24: Min: 219.05 | Max: 233.05 | Last: 228.95
BRL/USD: Min: 5.4633 | Max: 5.7009 | Last: 5.4781
*Data as of the completion of this report
WEATHER
A dry air mass will once again predominate over the next few days in all coffee-growing regions, making it difficult for clouds to form and blocking the arrival of cold fronts.
There is a possibility of a cold front reaching the coast of São Paulo between Tuesday and Wednesday of next week. The frontal system is expected to pass with low intensity and there is no forecast of a drop in temperatures.
South Minas, Zona da Mata, Cerrado and Alta Mogiana regions: No rain forecast
Garça region: between 5 and 10 mm.
DOMESTIC MARKET and FOB
On the FOB, buyers are expecting much cheaper differentials for this early crop, especially in 17/18. The differentials for large screens are further away from those for small screens, which can reach over 12 cents depending on the quality. There are demands for deliveries in the short term, but few deals are taking place.
Rio Minas coffees continue to have firm differentials and sellers are trying to change the large screens for 16/18 and 15/16 coffees for 14/16 shipments. There is some demand in the market for future shipments, but differentials don’t seem to be attracting buyers to make a decision.
During the week, the coffee selling pace has not improved and the internal business liquidity is still as before. Asked prices are not matching the bids. With the weaker currency and also higher NY of todays market, producers see a support for selling less volume of coffee as they can benefit from an increase in prices.
The requests from sellers in the domestic are as below:
Strictly soft good cup running screen around R$ 1,300.00
Strictly soft fine cup running screen around R$ 1,380.00
Rio Minas: running screen between R$ 1,170.00 and R$ 1,180.00
600 defects around R$ 1,200.00
LOGISTICS
Shipowners MSC and ZIM continue to have difficulties releasing containers, indicating a scenario of low stocks of units to fulfill shipments. In addition, some shipowners no longer have space for July ships to the United States and Asia. MSC is slow to confirm bookings due to the unavailability of equipment (containers). Shipowners such as MSC, CMA CGM, ONE and Hapag are facing difficulties in releasing containers.
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.