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Weekly report – Brazilian Coffee Market – June 28- July 2, 2021

by Jul 2, 2021Market report0 comments

NYSE and BRL/USD
At the beginning of the week, the frost alert in the south and southeast of Brazil gave strong support to Arabica quotes on NYSE, but parts of the gains were soon returned during Thursday and Friday after it was noticed that there was no significant impact on the main coffee areas of the country. With the stronger dollar, the Real depreciated again during the week and traded above R$5.00, putting pressure on the commodity’s prices.

September/21: Min: 152.80 | Max: 164.65 | Last: 153.05 USC/lb
BRL/USD: Min: 4.9185 | Max: 5.0547 | Last: 5.0410
*Data as of the completion of this report

WEATHER
The forecasts were confirmed and the polar air mass that advanced over Brazil this week brought intense cold to most of the country and three days of frost, affecting mainly corn and sugar cane areas.

The coffee regions were less affected, but there was a record of a strong frost in Paraná, moderate frost in Mogiana, and isolated points in the South of Minas. It is believed that in most areas there was white frost, without scale damage for the 22/23 harvest. In other coffee areas, temperatures were below 10ºC. For the next few days, there is no risk of frost, but the weather should remain cold and dry.

DOMESTIC MARKET AND CROP
The domestic coffee market was more active on Monday during the highs of NY, but continued the week with little movement from the producer who was attentive to the frost risks and involved in harvesting operations. Some lots of new crop were sold between R$800 to R$830.

The dry weather favors the harvest, which is moving towards 50% in the Zona da Mata and advances in the South of Minas Gerais and Cerrado. According to Safra e Mercados, the harvest of the 21/22 crop in Brazil reached 48% by June 29.

LOGISTICS
International ocean freight prices suffered new increases this week amid high global demand, shortage of food-grade containers in Brazil, lack of space on vessels, and cargo rolling without prior notice. We can’t remember a period with so many challenges in international logistics and there is no prospect of improvement in the short term. The concern gets even greater with the arrival of the second half of the year, the peak period for exports of new crop coffees from Brazil. It is worth noting:

  • Getting space for shipment on vessels to the United States has been beyond extremely difficult, conditioned to exorbitant freight prices and no guarantees that it will actually be shipped. The other option has been bookings for 6 weeks after the request, also with no guarantee of confirmation;
  • For Japan there is also little space, with availability starting 4 weeks after the request;
  • Hamburg Sud, CMA CGM, and Hapag Lloyd (see note) have informed tariff increases (GRI) as of August 1, 2021, for shipments from South America to North America and elsewhere.

COVID-19 IN BRAZIL
Brazil surpassed 100 million doses applied to the COVID-19 vaccine yesterday. It is down since June 20 and is related to the advance of vaccination among people over 60.

People who received the first dose: 74,540 mi (35.2% of the population)
Fully vaccinated persons: +25,944 mi (12.55% of the population)
Cases: + 18.622 million
Deaths: 520.189

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