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Weekly report – Brazilian Coffee Market – May 8th ~ 12th 2023

by May 12, 2023Market report0 comments

KCNY and Currency

Throughout the week, the coffee market traded within a range of just over 900 points in the July/23 contract. The weather is still being watched cautiously by the coffee market, as well as expectations for the 23/24 crop, even though the arabica harvest is in its early stages. 

On Wednesday, the US Consumer Price Index (CPI) data came in below expectations. On Thursday, the Producer Price Index (PPI) showed an increase of 0.4% in April compared to March. These indicators signal that inflation is losing strength in the United States, directly impacting the exchange rate. 

Also on Wednesday, Cecafé released the April/23 export report, which showed that coffee shipments for the month totaled 2.722 million 60kg bags, a 10.3% decrease compared to the same period in 2022, when they totaled 3.034 million bags. 

NY ICE certified stocks continue to decline, totaling 646,385 60kg bags on Thursday (11). A year ago, stocks were around 1.1 million bags, representing a drop of just over 457,000 bags. No bags are currently pending approval. 

JULY/23: Min: 180,60| Max: 189,295| Last: 182,85 
BRL/USD: Min: 4,9080 | Max: 5,0374 | Last: 4,9230 

*Data as of completion of this report. 

WEATHER

The cold front that arrived on the coast of the Brazilian Southeast region last Wednesday is expected to advance over the weekend to southern Bahia state. The polar air mass that came behind the frontal system arrived with weak intensity and did not cause a sharp decline in minimum temperatures in coffee regions.   

For next week the forecast is that the dry air mass will predominate in the coffee regions, and the days should be sunny and the nights with mild temperatures, which are typical conditions for this time of year. 

Rain forecast for the week: 

South Minas region: no rainfall forecast. 

Matas de Minas region: possibility of light rainfall between 5 and 10 mm. 

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 a good number of offers, but few reported trades, as prices remain mismatched between buyers and sellers. Some new-crop coffees have already been offered, but with low grades ranging from 35 to 40%. The offers for the current crop were mostly for ready-to-ship coffees. 

In the FOB market, transactions remain sporadic. Differentials for the current crop are still less attractive than those for new crop shipment, but the market remains cautious in making deals. 

The ideas of sellers in the domestic market are as follows: 

Strictly soft good cup running screen: seller close to R$ 1.020,00
Strictly soft fine cup running screen: seller close to R$ 1.060,00
Rio Minas: 
Running screen with 25% low grades close to R$ 950,00
17/18 around R$ 1.060,00
14/16 around R$ 1.030,00
600 defects: close to R$ 940,00;

LOGISTICS

  • The agriculture sector is the one that most moved the Brazilian trade balance until May. According to data released by the Ministry of Development, Industry, Commerce and Services, unroasted coffee, rice, and soybeans were the most exported products in 2023. 
  • As reported by A Tribuna, Ibama extended the installation license for dredging the depths of docks 12A to 23 and their access points at the Port of Santos until April 2025, with the aim of achieving a depth of 15 meters. Dredging is the process of creating or expanding channels to access ports by removing accumulated sediments over time. 

For certain export destinations, more time is needed to secure availability of space on ships, especially for shipments to the United States. 

The shortage of containers at the Port of Santos continues, with delays in equipment release, but no affected shipments so far.  Compared to the Port of Santos, the Ports of Rio de Janeiro and Itaguaí have a more favorable scenario regarding the availability of food grade containers. However, some maritime companies also face challenges in releasing these containers

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.