NYSE and BRL/USD
The Arabica futures market, very volatile this week, followed the BRL/USD (also very volatile), the Covid in Brazil, the Brazilian crop and the advance of vaccination in important consuming countries, operating on Friday with technical lows for the KCNY contracts.
On Wednesday, Copom raised the Selic rate, the basic interest rate of the Brazilian economy, from 2% to 2.75% per year aiming to control rising inflation in the country. The increase went beyond what was expected by the market and the Real responded by appreciating against the US Dollar.
The GCA reported on Monday that U.S. inventories in February, fell to 5.79 million bags (-8.3% p.a.), the lowest level in 5 years, signaling possible warming in demand, giving support to prices on the stock exchange. On Thursday, ICE certified stocks of Arabica fell by 4,493 bags. Optimism about vaccinations in the US and UK also brings the hypothesis of increased consumption of the drink.
May/21: Min: 128.25 | Max: 135.65 | Last: 128,75 USC/lb
BRL/USD: Min: 5.4600 | Max: 5.6827 | Last: 5,4690
*Data as of the completion of this report.
DOMESTIC MARKET / FOB
A very slow week for business, both in the domestic market and for FOB sales. The domestic market continues with firm prices and the drops in prices inhibited the offers in the IM. There is a certain mismatch between prices offered in the IM and those demanded in the ME.
The low availability of stocks of food grade containers has hindered the flow of coffee shipments, especially with Hapag and MSC. We ask importers to verify with shipowners the availability of equipment when the freight is closed, and to send Shipping Instructions as soon as possible.
From this weekend until March 28, an atmospheric blockade brings dry and hot weather for most of the coffee regions, which may bring a reduction in soil moisture in some regions.
In most Arabica plantations, the coffees are developing normally, with branch growth and good vegetative vigor. In some lower and warmer regions, the fruits are in the final stage of ripening, and harvesting generally begins in April. While in higher and colder regions, the fruits are still in the developmental stage.
COVID-19 IN BRAZIL
The market has been closely following the worsening of Covid in Brazil. From every 4 people that died from the disease in the world this week, 1 was in Brazil, corresponding to 23% of the deaths caused by the virus on the planet. Almost everywhere in the country, health care units are overloaded, and 25 of the 27 state capitals have ICU capacity of over 80%.
To contain the expansion of the disease, stricter restriction measures and strategies to accelerate vaccination are being adopted in Brazil. Minas Gerais has joined the “purple wave”, starting to enforce curfews, health barriers and surveillance by security forces on the streets. This Friday, Fiocruz should finalize the delivery of 1 million doses of the Oxford vaccine manufactured in Brazil. The expectation of the foundation is to reach the end of this month with a production of about one million doses of the vaccine per day.
Vaccinated since Jan 17 (1st dose): + 10.984 mi
Percentage of the vaccinated population: 5,19%
Cases: + 11.78 mi
Deaths: + 287.49 K
Recovered: + 10,38 mi
Let’s keep believing and investing in the coffee culture!
Atlantica Coffee Team