KCNY and Currency
This week, which was a bit shorter in Brazil due to the Labor Day holiday, the coffee market traded within a range slightly wider than 800 points. The arrival of the Brazilian crop, the expectations of global supply and demand, as well as the approaching cold season in the southern hemisphere, are all factors closely watched by the market.
On Wednesday (03), the US Federal Reserve (FED) raised interest rates by 0.25 percentage points to a range between 5% and 5.25%, as expected, while the Brazilian Monetary Policy Committee (COPOM) kept the SELIC rate at 13.75%. It was a day of high volatility in the NY ICE coffee futures market, showing that coffee remains quite vulnerable to macroeconomic factors.
The International Coffee Organization (ICO) published on its website that global coffee exports in March 2023 were 12.02 million bags, compared to 13.25 million bags in the same period of 2022, representing a 9.3% decrease. The National Federation of Coffee Growers of Colombia (FNC) also reported a 25% drop in production in April 2023 compared to the same period last year, totaling 566,000 60kg bags. As the world’s largest producer of washed coffee, Colombia is also closely monitored by the market.
The certified stocks of NY ICE continue to decline steadily, ending on Thursday (04) at a total of 659,324 60kg bags, a decrease of 83,570 bags compared to March 31. For just over a month, the stocks have remained without any pending bags for approval.
JULY/23: Min: 181,10 | Max: 189,25 | Last: 188,05
BRL/USD: Min: 4,9250 | Max: 5,0530 | Last: 4,9290
*Data as of completion of this report.
WEATHER
In April, the sea water temperature on the coasts of Peru and Ecuador continued to rise, suggesting the possibility of an El Niño. This change in climate is already being felt in coffee-growing regions due to the absence of polar air masses during autumn and the occurrence of isolated rainfall accompanied by hail, an atypical situation for this time of year resulting from the transition from the La Niña to El Niño weather phenomena.
A new cold front is expected to reach the coast of São Paulo on Tuesday, with the possibility of causing light rainfall between Tuesday and Thursday in the coffee-growing regions of Garças, Mogiana, and the south. However, there is no forecast for rain in other coffee-growing regions.
Rain forecast for the week:
South Minas region: possibility of light rainfall between 20 and 30 mm.
Matas de Minas region: no rainfall forecast.
Cerrado region: no rainfall forecast.
Alta Mogiana region: possibilities of light rainfall between 20 and 30 mm.
Garça region: possibilities of light rainfall between 10 and 20 mm.
DOMESTIC MARKET and FOB
In the domestic market, there were few specific transactions, mostly for replacement. The differentials for the current crop are still tight, which makes it difficult to have a wider range of deals for short-term shipment, thereby setting the pace of the domestic and FOB scenarios.
The ideas of sellers in the domestic market are as follows:
Strictly soft good cup running screen: seller close to R$ 1.030,00
Strictly soft fine cup running screen: seller close to R$ 1.070,00
Rio Minas:
Running screen with 25% low grades close to R$ 900,00
17/18 around R$ 1.100,00
14/16 around R$ 1.050,00
600 defects: close to R$ 950,00;
LOGISTICS
- On Tuesday (02), PortosRio announced that the port of Itaguaí, in Rio de Janeiro, now has a new operational draught, which increased from 17.8 meters to 18.3 meters in the main channels and Ilha das Cabras.
- There was an oil leak during refueling of the Pride ship at one of the terminals in the port of Santos, with about 200 liters of the product spilled, according to the São Paulo State Environmental Company (Cetesb). There is still no knowledge of any environmental damage caused by the leak.
- The Santos-Guarujá tunnel project has gained attention from industry entrepreneurs with the presentation of the new board of the Port of Santos, strengthening the dialogue for the project’s construction.
Currently, we have not faced a shortage of space on ships, except for shipments to North America, for which immediate shipment would only be possible through spot rates. The lack of containers at the port of Santos continues to be a problem in some cases, leading us to choose the port of Rio de Janeiro when possible.
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.