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Weekly report – Brazilian Coffee Market – November 27th ~ Dezember 1st 2023

by Dec 1, 2023Market report0 comments

KCNY and Currency

Coffee prices on the New York Stock Exchange worked between 166.00 and 188.25 cents per pound on the March/24 expiration date, the most liquid one, totaling a volatility of 2225 points for the week. Much of this volatility was seen in Thursday’s (30th) quotes, where the market fluctuated by 1235 points and the continued decrease in NY ICE certified stocks was a support. On the other hand, the weather in the coffee-growing regions of Brazil and expectations for the 24/25 crop also remain on the radar. On Friday, the volatile market gave back part of its rise.  

On the exchange rate, the real and the dollar continue to oscillate their strengths, so the week’s quotes ranged from R$4.85 to R$4.94. The expectation of the end of the interest rate increase cycle in the US remains, while on the domestic front, the November 30th quotes help define the November/23 PTAX. Even so, the dollar closed the month down.  

The Commodity Futures Trading Commission (CFTC) is due to release this Friday (1st) a report on the positioning of traders in the New York coffee market for the week ending Tuesday (28th). In the latest report, investment funds increased their long position to 12,499 lots on the 21st, compared to 11,207 lots on the 14th.  

Certified stocks of coffee on NY ICE closed Thursday (30th) at 224,066 60 kg bags, this total represents a drop of 66,668 bags over the last 7 days. There are currently 23,870 bags pending approval. 

MARCH/24: Min: 166.00 | Max: 188.25 | Last: 179.50 
BRL/USD: Min: 4.8568 | Max: 4.9453 | Last: 4.9310 
*Data up to the finalization of this report 


WEATHER

The month of November was marked by a strong heatwave between the 12th and 19th in all of Brazil’s coffee-growing regions. Global warming and the strong El Niño are the two factors responsible for the heatwave and the lack of significant rainfall in some regions.  

Climate forecast models show that the beginning of December should be rainy in almost all coffee-growing regions, however, the climate forecast is for rainfall below the historical average in the Zona da Mata, Cerrado, Northern Espírito Santo and Southern Bahia regions.  

Comparison between the rainfall observed in November and the historical average: 

Region Observed rainfall in November/2023 Average November rainfall Percentage   % 
Zona da Mata 97 mm 240 mm 40% 
Cerrado 74 mm 195 mm 38% 
South Minas 185 mm 184 mm 100% 
Mogiana 99 mm 184 mm 53% 
Garça 138 mm 154 mm 89% 

Rain forecast for the week:  

South Minas region: between 50 and 60 mm.  

Zona da Mata region: between 40 and 50 mm.  

Cerrado region: between 30 and 40 mm.  

Alta Mogiana region: between 50 and 60 mm.  

Garça region: between 30 and 40 mm. 


DOMESTIC MARKET and FOB

On the domestic market, producers took advantage of the rapid advance in NY ICE prices to raise their bases and seek profits on their operations. The aggressiveness of negotiations was much reduced due to the end-of-year movement, but with the rise in prices in New York there was some appetite to offer on the market. However, these bases remained far from what exporters were practicing. As a result, some short-term business was reported as necessary. Futures trading was favored by the rise, and trades were reported. On the FOB, demand remains weak, with occasional trades. There are still some positions to be covered for shipment in the short term, but with reduced availability on the part of exporters. 

The requests from sellers in the domestic were as below:

Strictly soft good cup running screen: seller close to R$ 920.00
Strictly soft fine cup running screen: seller close to R$ 970.00
Rio Minas: Running screen with 25% low grades close to R$ 790.00
600 defects: close to R$ 730.00


LOGISTICS

  • The technical director of the Brazilian Coffee Exporters Council (Cecafé), Eduardo Heron, together with the technical coordinators of the organization’s Logistics Committee, Ronald Pires de Moraes and Hamilton Sá, held a meeting on November 30th with Bruno Stupello and Marcelo Patrício, the new Project Development director and the executive manager of Port Operations at Santos Brasil. During the meeting, organized by Cecafé, challenges faced by the coffee exporting sector were discussed, especially in relation to ship delays, which result in additional storage costs and weighing of bitrem. The information was published by the Cecafé portal.  

The main destinations for Europe, Asia and the USA already have little, or no allocation left for 2023. We would like to draw your attention to the need to send your shipping instructions in advance. 

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.