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Weekly report – Brazilian Coffee Market – Oct 25-29, 2021

by Oct 29, 2021Market report0 comments

Siga e ouça no spotify! Novos episódios em português aos sábados pela manhã.


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.

  • In a week of high volatility, the December/21 Arabica contract traded between 197.25 and 210.30 USC/lb, responding mainly to macroeconomic events and the exchange rate.
  • Arabica contracts in NY operate Friday in appreciation, with Z1 at 201-ish USC/lb, recovering with technical adjustments part of the losses of Thursday’s trading session (28). Last week, KCZ1 adjusted at 199.85 USC/Lb;
  • ICE stocks of Arabica fell to 1.89 million bags for the week;
  • The Brazilian real depreciated once again this week, trading around R$5.60, which helped support coffee prices;
  • Copom adjusted the basic interest rate in Brazil to 7.75% per year, an increase of 1.5%, to control inflation. With the adjustment, Brazil now has the highest real interest rate in the world, which, ceteris paribus, could be very attractive to investors in the country. However, the fiscal challenges and political tension in the country contributed so that the dollar still closed the day high, quoted at R$ 5.6248.

December/21: Min: 198.40 | Max: 208.65 | Last: 202.15
BRL/USD: Min: 5.5371 | Max: 5.6627 | Last: 5.6280
*Data as of the completion of this report


WEATHER
Very voluminous and well-distributed rains were registered in October in the main Arabica areas;

  • South of Minas Region: Rains were above average for the month in Varginha, Três Corações, Alfenas, Três Pontas and Boa Esperança. The precipitation was between 50 and 100 mm above the expected;
  • Zona da Mata Region: In the Zona da Mata the rainfall was much higher than expected for the month. It rained between 100 and 150 mm above the expected for the month. The largest rainfall volumes were observed between Alto Jequitibá, Manhumirim, Alto Caparaó, Manhuaçu, Santa Margarida and Viçosa;
  • Cerrado Region: The rains were around the expected average in the municipalities of Patrocínio, São Gotardo and Patos de Minas;
  • Garça Region: Deficit rainfall between 50 and 100 mm in all the municipalities. Little rain in the region;
  • Weather forecast for the next 7 days: Lines of instability should begin to form in the west of the country and organize rains in Minas Gerais. A rainy week is forecast for the regions of CERRADO, SUL AND ZONA DA MATA. There is no forecast of significant rain for the state of Sao Paulo.
  • See the figure with the forecasted volume for the next days:

DOMESTIC MARKET and FOB

  • With the low levels reached on the week, the domestic market was very slow and short of offers;
  • The business of bica corrida dura type 6/7 took place around R$1200-1320 in the main regions, which are, atypically, quite aligned in prices;
  • In FOB exports, clients showed some demands for certified coffees, Rio Minas, and some group 1 qualities, but business continues at a slow pace.

    RIO MINAS
  • Very low offer of Rio Minas in the domestic market;
  • It has been rare to buy lots of this quality in Brazil because the lack of rain during the drying of the fruits in the terrace did not give fermentation conditions to obtain the characteristic Rio profile in the coffees of this crop;
  • Internal buyers’ prices were around R$1150 to 1190 for bica corrida, R$1250 for #14/16 and R$1290 to 1300 for MTGB #17/18;
  • However, producers are asking about 10 to 20 reais more per bag, making business impossible, as importers are not willing to buy on these bases.

LOGISTICS

The chaos in international maritime logistics has generated bottlenecks in loading at origin and also in unloading at destination. Every day there are dozens of changes in the dates of departure of ships and many bookings have been canceled by shipowners who allege a lack of containers (mainly MSC, CMA CGM, and Hapag Lloyd). The delays in ship departures, cancellations, and lack of containers have caused the butterfly effect in the coffee supply chain, implying:

  • Delays in the schedules of carriers, warehouses, and exporters;
  • Last-minute shipments, close to the loading deadline;
  • Backlogs of ready coffee in the courtyards of coffee warehouses;
  • Overtime of the logistics and warehouse teams;
  • Extra free time costs at origin and destination;
  • Extra costs with emergency taxes;
  • Delay in receiving cargoes at industries at destination;

New bookings:

  • Generally speaking: all routes are very restricted on ship space and we have received confirmations only for late November and December.
  • North America: New bookings only for late November and early December, with a lot of space restriction;
  • Japan: new bookings confirmed only for late November and early December;
  • Europe: new bookings have been confirmed only for late November and early December.

***Importers, we kindly ask you to URGENTLY anticipate all Shipping Instructions of the contracts to be shipped until December/21!***



COVID-19 IN BRAZIL
People who received the first dose: 154,265,235 (72.32% of the population)
Fully vaccinated people: 114,253,388 (53.56% of the population)
Cases: + 21,780,474 million
Deaths: 607,125 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