KCNY and Currency
In the second week of July, coffee prices on the stock exchange soared, continuing the turmoil seen at the beginning of the month. The weekly range observed was 2550 points for its most liquid maturity (September/24), the minimum was recorded on Monday (08) at 229.80c/lb and the maximum on Thursday (11) at 255.30c/lb, adjusting today (12) at 248.75, representing a rise of 8.65% compared to last week’s adjustment.
This week’s behavior indicates that KCU4 prices should remain above 230c/lb. In addition, the robusta continues to be uncertain about the restricted supply from Vietnam, due to the dry weather, which has led to a rise in prices in London and is also putting pressure on Arabica prices in NY.
Prices for the September/24 maturity since 01/01/24. Source: Barchart.
On the foreign exchange front, the week was all about monitoring the domestic tax situation and US economic data. Amid the ups and downs of the dollar, Brazil’s vice-president Geraldo Alckmin once again slammed decisions on the Brazilian interest rate, claiming that rates are unduly high. Despite this, Alckmin reiterated his commitment to the Union’s fiscal targets on Tuesday (09/07). In addition, the monthly IPCA was released at 0.21%, lower than expected by analysts.
In the United States, Jerome Powell made statements indicating the possible start of a US interest rate cut later this semester, given that, according to him, the US economy is not overheating, also noting the CPI, released on Thursday.
On Friday (05), the CFTC released its market positioning report. The weekly positioning observed was a reduction of 2,892 lots in the balance bought by speculative funds, ending the week with a balance of 44,821 compared to 47,713 the previous week, a drop of approximately 6.1%, indicating possible repurchases of positions in light of the movements observed this week.
Certified stocks fell by 1% compared to last week’s total, ending Friday (12/07) at 805,366 bags, with 51% of this volume being of Brazilian origin. Pending stocks stand at 23,264 bags.
SEPTEMBER/24: Min: 229.80 | Max: 255.30 | Last: 248.85
BRL/USD: Min: 5.3696 | Max: 5.4942 | Last: 5.4226
*Data as of the completion of this report
WEATHER
Last week was marked by a cold front that acted with weak intensity in the state of São Paulo, causing light rain in some municipalities in the Garça region.
There are no forecasts for rain or a drop in temperatures in the coffee-growing regions until the end of July.
DOMESTIC MARKET and FOB
FOB market remains cautious with the swings in NY. There was some interest from buyers and good volumes were quoted during the week for the entire 24/25 crop. Good volumes for both the short and long term, but buyers are still delaying their decision as much as possible. There is a big difference between prices on the FOB market, with some sellers showing aggressive differentials and others remaining conservative. Prices for large coffees remain firm for all qualities. Many buyers are requesting EUDR from October, anticipating any possible logistical delays. FOB market is not very busy for this time of year. Last Thursday, Cecafe released export data for June/24, showing that Brazil set a record with total exports of 47.3 million 60 kg bags for the 23/24 crop year, an increase of 33% on the previous crop.
On the domestic market, there was an increase in offers and business encouraged by the highs in NY and the real, which remains devalued. A good volume of domestic business was reported during the week.
The requests from sellers in the domestic are as below:
Strictly soft good cup running screen around R$ 1,360.00
Strictly soft fine cup running screen around R$ 1,410.00
Rio Minas: running screen with 30% low grades around R$ 1,190.00
600 defects around R$ 1,230.00
LOGISTICS
During the week, we had very restricted spaces to the United States. The shipping company MSC canceled bookings due to allocation restrictions. In addition, there is a shortage of containers from the shipowners CMA CGM, ZIM and MSC, and great difficulty for the shipowner to withdraw.
Ocean freight rates continue to rise on the spot market, due to the global logistical chaos. Among the factors are the Russia-Ukraine and Israel-Palestine wars, attacks on ships in the Red Sea, the increase in car exports from China before tax increases in Europe, the USA and Brazil, as well as the growth in trade between Asia x Asia and Asia x Northern Europe and America.
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.