KCNY and Currency
The week on NY “ICE” was volatile. ICE with important downward movements during Thursday and Friday. The dollar follows the appreciation movement in Brazil and in other markets.
At the same time, the new lockdowns in China bring unrest in the markets, decreased risk appetite and higher logistics costs, as well as the war between Russia and Ukraine. On NY “ICE” there was a downward movement in the middle of the week, interpreted by some as the beginning of the harvest of the new crop.
• Conilon yields have been reported to improve for harvest 22/23 in this early harvest, both in Espírito Santo and Bahia;
• In April, Colombia’s coffee production totaled 750,000 60kg bags, 7% less than the same period last year, maintaining the downward trend in production for this year as a result of excessive rainfall brought on by La Niña;
• Last Wednesday, the Fed raised US interest rates by 0.5 percentage points, which brought about an appreciation of the dollar not only in Brazil, but also in other markets;
• Also last Wednesday, Copom increased the Selic interest rate to 12.75%, a move already expected by the market in view of the high inflationary levels;
• NY “ICE” certified stocks closed on Wednesday at 1,121,597 60 kg bags;
JULY/22: Min: 211,10 | Max: 226,25 | Last: 210,10
BRL/USD: Min: 4,8936 | Max: 5,1144 | Last: 5,0708
*Data as of the completion of this report
WEATHER
A cyclone formed on the continent during the week – in the southern region of Brazil – an unusual phenomenon since cyclones are normally formed in the ocean. This event brought very strong gusts of wind, lots of rain in the South of Brazil, overflowing rivers, etc.
In Minas Gerais, the cold front arrived on Wednesday bringing rain in the coffee regions. The cold front has already dissipated. The La Ninã phenomenon, which acted during the rainy season, is already beginning to lose intensity, that is, the water temperature in the Pacific is warming up.
Rainfall:
In May, the rains should be above average in the South of Minas, Zona da Mata and Mogiana regions. In June, they should be around average in the South, Mogiana and Garça regions, a month in which it usually rains a little. For July, August, September and October the rainfall should be below the historical average. The 2022/2023 rainy season will start later and it is expected that the dry air mass will act in the southeast region until October.
Temperature:
No significant polar air masses are forecast for agriculture in May. A polar air mass is forecast for the second half of June, bringing below average temperatures and the possibility of weak frosts in the South region and Mogiana, in July and August. The expected frosts are not like those that occurred last year.
Climate Prediction for the coming years:
As brought by the BBC: “the latest report from the Intergovernmental Panel on Climate Change (IPCC) states that both humans and nature in general are being put under pressure beyond their ability to adapt. According to the worrying study, more than 40 percent of the world’s population is “highly vulnerable” to the state of the climate. However, if the temperature rise is kept below 1.5 degrees Celsius of pre-industrial era levels, the losses currently projected can be reduced.”
Between 2010 and 2020, the death toll from floods, droughts, and storms in vulnerable regions, including parts of Africa, South Asia, and South and Central America, was 15 times higher than the total in other parts of the world. Nature is demonstrating the dramatic impacts at the current level of warming. The IPCC report highlights the growing impacts that are expected as temperatures around the globe currently rise by 1.1° celsius over the pre-industrial period. We can already see these climate impacts. For example, drastic changes in climate characteristics from one year to the next, with droughts, frosts, floods, tornadoes, etc.
DOMESTIC MARKET and FOB
Local and FOB market with few deals reported. More recurrent demand for certified coffee.
Prices on the market ahead of the lows:
Strictly soft good cup running screen: seller close to R$ 1.260,00;
Strictly soft fine cup running screen: seller close to R$ 1.310,00;
Rio Minas:
17/18: R$ 1.200,00
14/16: R$ 1.160,00
Running screen with 30% low grades: close to R$ 1.100,00;
600 defects: buyer around R$ 1.080,00 and seller close to R$ 1.180,00
LOGISTICS
May ships are already committed. New bookings are being confirmed for the second half of June. The port of Rio de Janeiro is experiencing serious operational difficulties and delays.
MSC, Hapag-Lloyd and CMA CGM have reported low container stocks.
COVID-19 IN BRAZIL
People who received the first dose: +177.356.086 (88,61% of the population)
People fully vaccinated: +163.815.874 (81,5% of the population)
Cases: + 30.414.677 million
Deaths: 663.289 thousand
*Please be advised that last week’s figures were taken from another source. Please consider this week’s data.
Let’s continue believing and investing in the coffee culture!
Atlantica Coffee Team
FRAUD ALERT
Fraudsters have created accounts at the domains atlanticacoffeee.com (with 3 letters “e”), atlanticacoffees (plural) and atlantlcacoffee (using the lowercase of L instead of the letter i) and for the prefixes using the names of our employees, even imitating our signatures. They are quoting coffee, issuing invoices with altered payment data, mostly to banks in Hong Kong, which we are not ours! Please be aware of the sender of the messages and always question instructions to change bank details!
Our only official e-mail domain is: atlanticacoffee.com