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Weekly report – Brazilian Coffee Market – June 21-25, 2021

by Jun 25, 2021Market report0 comments

NYSE and BRL/USD
In a week of mixed variations, Arabica contracts reacted to the macro, a cold front in Brazil and the appreciation movement of the Real with Selic rate hikes. On Friday there was a rise of over 300 points for Arabica contracts, with the support of the dollar that during the morning remained below the psychological mark of 4.90 reais, added to the forecast of intense cold and dry weather in Brazil. Logistics in Brazil is alarming.

September/21: Min: 149.05| Max: 158.25 | Last: 157.80 USC/lb
BRL/USD: Min: 4.8985| Max: 5.0909 | Last: 4.9680
*Data as of the completion of this report

WEATHER
The last week of June is expected to be marked by intense cold across Brazil, according to this Friday’s forecast. A polar air mass will cause temperatures to plummet from Sunday (27), and may drop by 10ºC in Minas Gerais, Sao Paulo and Parana. There is a risk of frost on Wednesday (30) in specific areas of coffee in the north of Paraná, and it may reach the extreme south of São Paulo.

DOMESTIC MARKET AND FOB EXPORT
The domestic market is not very busy with the retraction of prices of the new crop to R$ 750-800 per bag, varying between regions and buyer’s needs. Arabica harvesting is moving towards 40% in the Zona da Mata, advances in the South of Minas Gerais and starts to gain pace in the Cerrado.

FOB export is very similar to the previous week, with low demand and punctual deals. There are reports of higher demand with dealers at the spot market, due to the current high prices of the origins and more expensive international freight.

LOGISTICS
The logistics situation in Brazil is alarming. There is a great demand for containers and vessels on an international scale, mainly to China. Thus, the insufficient amount of containers and space on vessels made available here by ship owners is affecting coffee shipments, generating delays and losses. It is worth noting:

  • Hamburg Sud, Hapag Lloyd, CMA CGM and MSC declined many bookings during the week;
  • Hapag Lloyd, Evergreen and CMA had the lowest container availability;
  • There was frequent cargo rolling on dates very close to shipment and without prior notice by the shipowners;
  • The freight rates are increasing monthly, significantly affecting the players’ margins and are already generating losses;
  • In the USA, the major ports are full. The port of Oakland has collapsed and shipowners have informed that they will only dock there again in mid-August;
  • European ports are facing difficulties, but incomparable to those seen in the USA. The port of London is congested. There are already comments about difficulties in Spain and Italy;
  • The port of Catargena-Colombia is very congested, with stalled vessels. MSC is charging premium freight rates to secure space and equipment for Catargena;
  • In July, MSC and Hapag are scheduled to transfer large ships from the Americas to Asia.
  • With the second semester coming to a close, the volume of shipments of the new crop from Brazil increases, when the situation may worsen.

In an attempt to mitigate the impacts of the logistical scenario on our customers’ shipments, we request you ask for the guarantee of equipment and space when contracting the freight and send the shipping instructions in advance.

COVID-19 IN BRAZIL
This week, Brazil received 3.8 million doses of Janssen’s single dose vaccine, which begins to be applied this Friday. The current health minister’s expectation is that by September/21 the entire population over 18 years of age will have received the first dose of vaccine. The average number of deaths is stable, but the cases are increasing.

People who received the first dose: 68,465 mi (32.33% of the population)
People fully vaccinated: +24,085 mi (11.79% of the population)
Cases: + 18 million
Deaths: 509.282 

Let’s keep believing and investing in the coffee culture!
Take care,
Atlantica Coffee Team