KCNY and Currency
The last week of March was one of significant volatility on the NY (ICE) and many lots traded on the nearest expiration, May/23, which worked in a range of over 1700 points. In the quarter ending today, Arabica futures contracts were very volatile, due to technical factors, such as the macroeconomic scenario, which directly affects exchange rates, and fundamental factors, such as concerns about global demands.
In foreign exchange, the market pressured dollar quotations both due to factors that strengthened the Brazilian currency and to factors in the external scenario. The disclosure of the new fiscal guidelines on Thursday (30) brought an expectation of improvement in interest rates, since the intention is to control expenses and curb the increase in government debt. In the macroeconomic environment there are also expectations of the end of the cycle of high interest rates in the US, which made investors less fearful about the risk.
Certified stocks on the NY exchange continue to fall, closing this Thursday (30) at 742,894 60kg bags and no bags pending approval. Over the last 30 days the total stock balance has decreased by 44,451 bags.
MAY/23: Min: 166,15 | Max: 184,00 | Last: 169,45
BRL/USD: Min: 5,0620| Max: 5,2495 | Last: 5,0720
*Data as of completion of this report.
WEATHER
Despite the predominant warm air mass in March, some cold fronts reached the coast of the Southeast, which resulted in isolated rains in the coffee growing regions of Cerrado, South Minas, Mogiana and Garça. It is important to emphasize that the Zona da Mata was the only region where precipitation was well below the historical average, as shown below:
| Region | Observed precipitation in March 2023 | Average March precipitation | Percentage compared to historical average |
| Zona da Mata | 13 | 163 | 7 |
| South Minas | 131 | 166 | 78 |
| Cerrado | 187 | 193 | 97 |
| Mogiana | 264 | 193 | 136 |
| Garças | 140 | 155 | 90 |
The cold front that arrives in São Paulo this Sunday is expected to advance during the week through the interior of Minas Gerais, and it is expected to rain in all coffee growing regions.
Rain forecast for the week:
South Minas region: between 40 and 50 mm.
Zona da Mata region: between 50 and 60 mm.
Cerrado region: between 50 and 60 mm.
Alta Mogiana region: between 35 and 40 mm.
Garça region: between 10 and 20 mm.
DOMESTIC MARKET and FOB
With the volatility on the NY stock exchange and the exchange rate, few deals were reported on the domestic market during the week, due to the producer’s fear of the NY drop and the search for more attractive differentials by the buyer. In the FOB, the demand for the short term is lower, since many buyers believe they can find better differentials in the future.
The ideas of sellers in the domestic are as below:
Strictly soft good cup running screen: seller close to R$ 1.050,00
Strictly soft fine cup running screen: seller close to R$ 1.120,00
Rio Minas:
Running screen with 30% low grades close to R$ 930,00
17/18 around R$ 1.050,00
14/16 around R$ 1.010,00
600 defects: close to R$ 970,00;
LOGISTICS
Brazil’s coffee beans exports in March were at 2,195,473 60-kilo bags until the 26th, with 18 working days (daily average of 121,970 bags). The revenue reached US$ 481.162 million (daily average of US$ 26.731 million), 28.6% less compared to the daily average of March 2022 (US$ 37.434 million).
No restriction was noted on ships departing in the next 4-6 weeks. Some shipowners again showed little availability of food grade containers (mainly 40′ DRY). Stuffing had to be rescheduled or even canceled.
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.