KCNY AND CURRENCY
Coffee prices on the New York Stock Exchange ended another highly volatile week. With the December 2024 options expiring this Friday (Nov 8), many funds adjusted their positions, creating volatility in the market as they sought to realize profits. Additionally, the approach of the delivery period starting on November 20 has intensified Z4xH5 rollovers. December 2024 contracts ended the week with 53,296 open positions compared to 84,000 for the next expiry in March 2025. The December contract hit a low on Monday (Nov 4) at 242.10 cents per pound and reached a high on Thursday (Nov 7) at 261.40. On Friday, the market gave back some of the previous day’s gains but still closed the week higher at 253.35, reflecting a total fluctuation of 1930 points.
Uncertainty continues in the market regarding global supply and demand: Brazil, the largest arabica producer, has been reporting increasing export volumes month over month. From January to September 2024, 36.4 million 60-kg bags were exported, compared to 27.8 million bags in the same period in 2023—an increase of 8.6 million bags year-over-year. Next week, Cecafé’s October 2024 export data is expected to be released, likely surpassing October 2023 figures. Another factor contributing to market uncertainty is rainfall in Vietnam, the largest robusta producer, currently in its harvest period, adding further concerns for market participants. Meanwhile, rainfall in Brazil and its impact on flowering for the 2025/26 crop are also being closely monitored.
Prices for the December/24 expiry date since 01/01/24. Source: Barchart.
In the currency market, the dollar traded between R$5.862 and R$5.634 during a week filled with events, expectations, and uncertainties. Early in the week, the most anticipated event was the U.S. Election outcome, yet Brazil’s fiscal uncertainties continued to impact negotiations, prompting the Brazilian government to cancel trips and focus on domestic challenges to calm the market.
The market is looking for concrete actions to confirm real progress on implementing the Fiscal Framework and stabilizing Public Debt. Amid these issues, Fernando Haddad stated that discussions on spending cuts are technically advanced.
Donald Trump’s victory in the U.S. presidential election has brought inflationary pressures to light, likely leading to higher U.S. interest rates for a longer period, thus strengthening the dollar. On Wednesday (6), COPOM raised the SELIC rate by 0.5 to 11.25%, and the following day, the FED announced a new 0.25 percentage point cut in U.S. interest rates.
The Commodity Futures Trading Commission (CFTC) released a report this Friday (8) on trader positioning for the week ending Tuesday (5), showing that funds reduced their long positions by 907 contracts, totaling 37,158 long lots.
Certified coffee stocks closed this Friday (8) at 852,638 60-kg bags, with 117,767 bags pending approval, of which 104,458 are of Brazilian origin. A year ago, stocks totaled 310,501 bags, representing an increase of 542,137 bags over the period.
December/24: Min: 242.10 | Max: 261.40 | Last: 253.35
BRL/USD: Min: 5.634| Max: 5.862 | Last: 5.76
*Data up to the finalization of this report
WEATHER
The cold front arriving this Friday in the Southeast region of Brazil is expected to bring heavy rains to all coffee-growing areas over the coming days. Between Friday and Sunday, the rain may be accompanied by lightning, strong winds, and hail. The areas with the highest potential for severe storms are South Minas, Mogiana, Cerrado, and Zona da Mata.
Rain forecast for the week:
South Minas region: between 130 and 150 mm.
Zona da Mata region: between 130 and 150 mm.
Cerrado region: between 100 and 120 mm.
Alta Mogiana region: between 90 and 120 mm.
Garça region: between 60 and 80 mm.
DOMESTIC MARKET AND FOB
With such volatility in New York prices and the dollar, the domestic market saw little activity this week, with buyers only making purchases as needed. Sellers remained calm, showing little interest in lowering their price levels, hoping for better rates, while buyers struggled to match these levels due to their sales commitments, leaving the price gap between the two sides completely out of sync. In the FOB market, little movement was reported throughout the week. As replacement price levels rose, differentials narrowed slightly, resulting in low market activity. For Rio Minas quotes, few transactions were reported as well, as differentials held steady, making dollar-denominated prices high for potential buyers, who are waiting for improvement.
The requests from sellers in the domestic are as below:
- Strictly soft good cup running screen around R$ 1,580.00
- Strictly soft fine cup running screen up to R$ 1,650.00
- Rio Minas running screen around R$ 1,310.00
- 600 defects aorund R$ 1,410.00; with requests reaching up to R$ 1,450.00 during NY ICE highs.
LOGISTICS
Nearly 3,000 bags were not shipped this week due to a lack of containers or delays in release. Depots report delays in receiving imports and the need for upgrades. Port conditions also remain critical, with significant operational restrictions causing berth and operation delays, cargo cuts, and even omitted port calls.
- The labor dispute in British Columbia continues to impact exports at Vancouver, Canada’s largest port, with a partial strike blocking 40% of container traffic at Montreal’s port. The standoff, concerning industries and provincial governments, shows no signs of resolution. (Source: Notícias Agrícolas)
- Brazilian public ports recorded a new high of 128.73 million tons in the third quarter of 2024, up 5.42% according to Antaq. Santos led with 37.44 million tons, followed by Itaguaí (17.31 million) and Paranaguá (16.44 million). Overall, there was a slight decline of 0.28% compared to 2023. (Source: Portos e Navios)
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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.