KCNY and USD
The coffee market followed closely the weather in Brazil, after the severe frost of July 20th. Throughout the week, there were corrections of the expressive highs of the previous week.
- On Friday morning the coffee market in the NY market fell sharply, after the first reports that the frost was less widespread than in the previous week;
- The September/21 contract ended the week quoted at 179.55 cents per pound on the NY exchange, a negative weekly variation of 945 points.
- There is still a risk of frost in the early morning between Friday (30) and Saturday (31).
- The Real has lost strength amid the troubled Brazilian political scenario and a stronger dollar with a greater aversion to global risk. The growing number of cases of Covid-19 by the Delta variant is on the market’s radar.
September/21: Min: 178.60 | Max: 215.20 | Last: 179.55 USC/lb
BRL/USD: Min: 5.0400| Max: 5.2294 | Last: 5.1880
*Data as of the completion of this report
New frosts occurred at dawn today (07/30), with moderate intensity in some coffee areas in the South of Minas, Mogiana, and Paraná;
- At first impressions, they were less extensive and severe than on 07/20, with temperatures stopping falling throughout the night. There are reports of new areas damaged, but so far they do not seem to be significant in scale;
- The cold air mass and frost conditions in Brazil should remain until August 1st. This week several photos and videos have been released of snow in the South, a very rare phenomenon in the tropical climate of Brazil;
- In the harsh and atypical winter this July, frosts affected several crops, such as coffee, corn, sugarcane, fruits, vegetables, wheat, and others. According to economists, the food losses caused by the cold waves, added to the water crisis, can reflect in increased inflation in Brazil and higher prices for final consumers, but there is no risk to the supply;
- The damage caused to coffee by extreme cold goes beyond frost and can be quantified more accurately only with time. In areas where frost was more intense, pruning may be necessary. The cold air mass at temperatures above freezing point, when passing over and remaining on more tender tissues, can cause drying of apical and reproductive buds and dehydration of young leaves, with a negative effect on the photosynthetic and reproductive capacity of the plant.
DOMESTIC MARKET and FOB
With the risks in the market, exporters temporarily left the market and/or operated during the week with great caution in the domestic and foreign market deals;
- In the FOB demand, the difficulty with replacement and NY levels locked the market.
- Short selling side in the Middle East, in expectation of new highs;
- In the Zona da Mata, the harvest is estimated at 90%;
- Producers are attentive to the rains in September, extremely important for crop 22;
- At the beginning of the week there was a strike by truck drivers at the port of Santos against high fuel prices, affecting containers’ picking up and return;
- The cancellations and omissions of scheduled shipments continue to occur without notice;
- Lower container availability observed with MSC, Hamburg Sud and Hapag Lloyd;
- Unavailability of vessel or space for:
- Colombia: all requests, all shipowners, have been declined due to lack of space on vessels;
- Europe: for most destinations there is space only for September;
- USA: all requests, with all shipowners, were declined for lack of space on vessels;
- Japan: some reservations, for smaller lots, were confirmed for the end of August.
COVID-19 IN BRAZIL
People who received the first dose: +983 mi (46.7% of the population)
Fully vaccinated people: +40.2 mi (19% of the population)
Cases: + 19.8 million
Deaths: 554,626 thousand
Let’s keep believing and investing in the coffee culture!
Atlantica Coffee Team