KCNY and Currency
The week was marked by volatility in coffee prices on the NY stock exchange, similar to the previous week, with a trading range slightly exceeding 1200 points for the July/23 contract. This volatility is not directly linked to fundamental factors but rather due to various events being observed by the market, such as the arrival of the 23/24 crop, the macroeconomic scenario, and the expiration of the July/23 options, which will take place next Friday (09). The weather is being closely monitored, and conditions are favorable for harvesting.
The exchange rate was also highly volatile, with the dollar reaching R$ 5.12 on Wednesday (31), a level not seen since the end of March/23. However, on Thursday (01), with the Senate approving the negotiation of an increase in the US debt ceiling, which is expected to be submitted for President Biden’s approval this Friday (2), the dollar weakened. Domestically, a favorable factor for the appreciation of the Brazilian real was the 1.9% GDP (Gross Domestic Product) growth in the first quarter of 2023, surpassing projections of only 1.2%.
Certified NY ICE stocks continue to decline, totaling 574,443 60kg bags as of this Friday (01), representing a decrease of 35,335 bags since the last day of the month. There are no pending bags awaiting approval since March 27, 2023. A year ago, stocks amounted to 1,043,879 bags.
JULY/23: Min: 175,55 | Max: 187,80 | Last: 180,30
BRL/USD: Min: 4,9470 | Max: 5,1277 | Last: 4,9620
*Data as of completion of this report.
WEATHER
The meteorological system known as “Cavado,” characterized by a drop in atmospheric pressure, passed through the Southeast region in the past few days, resulting in light rainfall in the coffee-growing areas of Garça, Mogiana, and South Minas. In the other regions, the weather system only brought partially cloudy conditions.
In the upcoming days, a continental dry air mass will prevail over the Southeast region of Brazil, leading to dry conditions and mostly sunny weather for a significant part of the day. There is no forecast for the arrival of cold fronts during the first half of June.
There is no rain forecast for the week.
DOMESTIC MARKET and FOB
In the domestic market few deals were reported in the week, despite several quotes. In the FOB, the market continues with narrow margins, but with some business reported.
The ideas of sellers in the domestic are as below:
Strictly soft good cup running screen: seller close to R$ 970,00
Strictly soft fine cup running screen: seller close to R$ 1.030,00
Rio Minas:
Running screen with 25% low grades close to R$ 890,00
17/18 around R$ 1.000,00
14/16 around R$ 970,00
600 defects: close to R$ 900,00;
LOGISTICS
Next week, the tax auditors from the Brazilian Federal Revenue will decide, in an assembly, the future of the mobilization initiated in May. Possibilities include a one-day per week strike and even an indefinite strike. The employees are demanding the regulation of Federal Law 13.464/17, which establishes the implementation of a salary agreement negotiated with the federal government in 2016. Each day of strike represents a loss of R$ 250 million in tax revenue, according to Sindifisco. This information comes from A Tribuna portal. The June shipments for services bound for Europe already show some restrictions in long-term contracts. Depots at the ports of Santos, Itaguaí, and Rio de Janeiro did not report any container restrictions this week
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.