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KCNY and dollar
The Arabica market operated the week between 198.40 to 208.65 USC/lb, with the expressive October rains in Brazil helping to pressure prices on the market.
- Despite the climatic pressure on levels, domestic sellers remain firm on prices and waiting for new highs. On the importers’ side, more expensive coffee prices, high freight costs, and logistical difficulties are causing the postponement of new purchases from the origin, keeping the market with little activity;
- The costs of inputs are very high and the energy crisis in China raises the alarm about a rupture in the global fertilizer market;
- The real dropped against the dollar and the U.S. currency flirted with R$ 5.70 after the economy minister Paulo Guedes spoke on Wednesday (20) in a possible waiver for an expenditure of R$ 30 billion, which exceeds the spending ceiling, to enable the Auxílio Brasil, the new social aid. The R$400 aid for low-income families is very important, but the financial market reacted negatively, because the non-compliance with the spending cap generates fiscal insecurity with a greater lack of control of public accounts, having a direct impact on the country’s debt, inflation, and interest rates.
December/21: Min: 198.40 | Max: 208.65 | Last: 199.50
BRL/USD: Min: 5.4568 | Max: 5.5743 | Last: 5.7338
*Data as of the completion of this report
WEATHER AND CROP
A very rainy October, with volumes above historical averages in coffee areas of Sul de Minas, Cerrado, and Zona da Mata. The rains this month are very positive for coffee, but it is important that they are regular and distributed in order to make up for all the water deficit of the last few months;
- In the Zona da Mata, the accumulated rainfall for the month is estimated at about 300 mm, and constant rains were recorded this week. There was an abundant blooming, but we must wait to see the real rate of setting of the buds and transformation into fruit. But expectations are good for the 2022 harvest in the region. We have observed that the producers are already preparing the soil for planting;
- According to Somar Meteorology, heavy rains are forecast to return as of Saturday over central and southern Brazil, starting with Paraná and Alta Paulista. On Sunday, it will reach Mogiana, southern Minas Gerais, Cerrado and Zona da Mata. There is also a forecast of heavy rain over southern Bahia in the coming days, indicating approximately 120mm in the region of Barra do Choça until Monday;
- According to the NOAA, between October 22 and 30, they forecast accumulations between 80mm and 90mm in southeastern Brazil, 70mm and 90mm in the Midwest, 20mm and 25mm in southern Brazil, and may reach 80mm in northwestern Paraná. Between October 30 and November 7, the rains could be even more voluminous.
DOMESTIC MARKET and FOB
Prices between buying and selling are far apart, but some occasional deals occurred to cover importers in the short term;
- Bica corrida type 6/7 was between R$1220 and 1300. Good and fine cup prices are very close;
- Rio Minas offers in the domestic market remain very short, with buyer and seller prices far apart. The buyer’s price for the bica corrida between R$1,150 and 1,180 a bag of 59kg, but requests are around R$1200 and with little supply;
- The lack of containers continues to delay the exit of coffee from the warehouses in several regions, which in general have high stocks;
- In the warehouse Leste de Minas Varginha, the volume of coffee and machinery is within the normal range, heading for the beginning of a gradual reduction;
- Some warehouses in the Zona da Mata region (Matas de Minas ®️) are with an inflow of coffee bica corrida and machinery operation below normal now, but stocks of ready coffee are high and congested with the lack of containers for disposal. Supplies in the region are lower and more expensive in this harvest, so it has been difficult to buy coffee lately, which affects warehouse inflows;
- On the FOB export side, there was a lot of interest in certified coffees, #17/18, MTGB and grinders of Fine Cups and Good Cups;
- The FOB export demands from Rio continue to be heated, but the expensive differentials close to those of group 1 make business difficult, besides freight and logistics issues. New clients from Rio are starting to access the origin, seeking to compensate for scarce business with their traditional suppliers.
LOGISTICS
The difficulties in maritime logistics are affecting all sectors worldwide. The global demand is far above the capacity of ports and carriers, and the logistics have reached a point of collapse and disruption. The Montesanto Tavares Group survey released on 10/21, points out that the logistical problems are generating delays in the order of 10% of the annual volume of coffee exported by Brazil.
- Many ports at destination are congested, such as the west coast of the USA, Italy, and the UK. Besides being operating above their operational capacity, there is a shortage of workers in the ports and truck drivers for the removal of containers and the removal of cargo.
- With the approach of the Christmas season, international traffic of goods in October and November is very heated to meet the high seasonal demand. Some shipping lines are adopting the omission of ports to try to speed up the flow of goods;
- In a scenario of scarce resources for shipments worldwide, competition is fierce and the most expensive freight ends up being prioritized. Coffee is a heavy commodity and cheaper freight, which makes it less competitive in relation to other cargoes;
- In Brazil, the lack of space on ships is critical. There are many ship delays, omissions, lack of windows for storage at the shipping terminal. The few confirmed bookings are for ships in late November, early December or early January! Cargoes are already being rolled over for December vessels.
Importers, please anticipate URGENTLY all shipping instructions of contracts to be shipped until December/21!
COVID-19 IN BRAZIL
People who received the first dose: +152,645,709 (71.56% of the population)
Fully vaccinated people: +108,129,955 (50.69% of the population)
Cases: + 21,696 million
Deaths: 604,764 thousand
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”) and atlanticacoffees (plural) and 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