KCNY and Currency
Coffee prices on the New York Stock Exchange worked between 166.75 and 174.45 cents per pound on the March/24 expiration date, the most liquid, totaling a volatility of 770 points for the week. The delivery notification period for the December/23 expiry starts on the 21st, so the flow of position rollovers should intensify, and the spread was quite inverted between the short and the next expiry considering the number of open contracts. Concerns about supply in the short term, given the low stock of certified coffees, continue to be on the agenda and play an important role in price fluctuations.
On the foreign exchange front, the dollar has weakened against the real, which is a factor contributing to the upward movements in coffee prices, given the risk aversion. On the domestic front, the Selic interest rate was cut last week by 0.5 p.p. to 12.25%, while in the US the FED has given signs that further rate hikes are still possible.
The latest report from the Commodity Futures Trading Commission (CFTC) published the position of Traders up to October 31, where the net position of the funds went from 2,152 lots short on the 24th to 2,327 lots long.
Certified stocks of coffee on NY ICE closed Thursday (09) at 302,235 60kg bags and there are currently no bags pending approval, representing a drop of 104,231 bags over the last 14 days. The current total volume is much lower than expected for the period and the lowest in 24 years.
MARCH/24: Min: 166.75 | Max: 174.45 | Last: 170.80
BRL/USD: Min: 4.859 | Max: 4.9466 | Last: 4.9224
*Data up to the finalization of this report
WEATHER
The next few days will be marked in the Southeast by the presence of a large mass of hot, dry air. The atmospheric blockade that is forming between the states of the Southeast and Midwest regions should make it difficult for clouds to form that cause rain and make it difficult for cold fronts to arrive. Temperatures above 36 degrees in almost all coffee-growing regions until November 15.
Chances of light rain only in the South and Zona da Mata between November 14 and 15 due to the passage of a cold front along the coast of Rio de Janeiro.
Rain forecast for the week:
South Minas and Zona da mata regions: between 10 and 15 mm.
Cerrado, Alta Mogiana and Garça regions: No rain is forecast.
DOMESTIC MARKET and FOB
On the domestic market, sellers’ bases have risen, in line with movements on the NY ICE, and there is a mismatch with buyers’ bases. However, in line with the fluctuations in coffee prices on the NY exchange and the dollar, some exporters have taken the opportunity to cover some positions. The flow of future purchases, on the other hand, has been more fluid and has increased in recent weeks. On FOB, few deals were reported, with buyers looking for more open differentials on group 1 coffees. For rio minas, even though the differentials are a little cheaper, the values quoted at apartment price are still far from what the buying end is looking for.
The requests from sellers in the domestic were as below:
Strictly soft good cup running screen: seller close to R$ 880.00
Strictly soft fine cup running screen: seller close to R$ 940.00
Rio Minas: Running screen with 25% low grades close to R$ 760.00
600 defects: close to R$ 740.00
LOGISTICS
According to data from the Detention Zero Bulletin (DTZ), prepared by ElloX and Cecafé, 76% of ship calls at the Port of Santos in October were altered. This is the highest rate recorded in 2023, surpassing those recorded in August (60%) and September (5%). The publication also pointed out the time taken to open gates: only 13% had gates open more than four days; 57% between three and four days and 30% less than two days.
In an interview with the A Tribuna portal, the director general of the National Waterway Transportation Agency (Antaq), Eduardo Nery, said that the Port of Santos has been building the way to increase capacity in terms of draft. According to Eduardo, there are plans to invest in dredging for the -16 meter quota, starting in 2024/2025. The implementation of the Santos-Guarujá tunnel is among the goals and projects for 2024 and Antaq has been actively participating in discussions about it.
In the last week, the lack of containers in the ports of Rio de Janeiro and Santos has intensified, damaging some exits. The proximity of the Christmas and New Year’s recess and festivities can also already be felt in warehouse schedules, which are requiring more advance notice.
We have also warned of space restrictions on ships leaving by the first half of December 23 for the main ports in the USA and Europe.
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.