KCNY and Currency
The NY “ICE” market showed a lot of volatility during the week, maintaining the downward trend. The factors are the same: the funds operated liquidating positions above expected, concerns about a worldwide drop in consumption, loss of purchasing power of importing countries and constant rainfall volumes in the producing regions, which favors a good crop in 23/24. The instability of the exchange rate reflects the political tensions in Brazil.
- According to the ICO report (International Coffee Organization) there was a drop of 0.4% in world coffee exports from October/21 to September/22;
- After the results of the presidential elections, several protests took place throughout Brazil during the week;
- The truck drivers’ strike, which has been going on since last Sunday, has caused delays and logistical obstacles all over the country;
- The Federal Reserve raised the interest rate by 0.75, indicating that this will not be the last correction;
- The NY “ICE” certified stock closed Thursday at 382,695 60-kg bags, with a significant number of bags pending approval that totals 162,302 60-kg bags;
- According to The Loadstar, which specializes in international logistics and supply chain, there was a sudden decline in demand, especially on the Asia-Europe route, which impacted shipping lines leading to falling sea freight rates;
DECEMBER/22: Min: 170,00 | Max: 183,40 | Last: 175,75
BRL/USD: Min: 5,0290| Max: 5,4083 | Last: 5,0340
*Data as of completion of this report.
WEATHER
The cold front that passed through the Southeast region last week brought moderate rainfall in all coffee growing regions. The decline in temperatures was caused by a polar air mass, atypical for this time of the year. The cloudiness prevented frost formation in the South Minas region.
The weather models show a strong descent of warm and humid air from the Amazon towards the Atlantic Ocean from Tuesday the 8th, which should bring rain clouds to the coffee regions of Cerrado, South Minas, Mogiana and Zona da Mata.
Rain forecast for the week:
South Minas region: between 60 and 80 mm.
Zona da Mata region: between 50 and 70 mm.
Cerrado region: between 90 and 110 mm.
Alta Mogiana region: between 50 and 60 mm.
Garça region: between 10 and 20 mm.
DOMESTIC MARKET and FOB
The FOB market has been slow, expectations are still far from reality. The events in Brazil, such as the elections, holidays, blocked roads and protests made it a slow week in business. The domestic market also lacks deals, and producers are frightened by the drop in prices.
Strictly soft good cup running screen: seller close to R$ 1.000,00
Strictly soft fine cup running screen: seller close to R$ 1.030,00
Rio Minas:
17/18: R$ 930,00
15/16: R$ 910,00
Running screen with 30% low grades: close to R$ 820,00
600 defects: close to R$ 910,00;
LOGISTICS
Besides the lack of food grade containers, another factor negatively impacted this week’s stuffing: the truck drivers’ manifestation in the state and federal highways in Brazil. Therefore, full containers were held up in warehouses waiting to continue their route, some vehicles could not show up – even with empty equipment collected – and some inspection and collection schedules could not be carried out either.
The main blockages occurred in the states of SP, RJ, MT, MS, RS, SC, PA, PR, MG, and the Federal District.
The little allocation available on vessels departing in November and early December also remains.
COVID-19 IN BRAZIL
People who received the first dose: +182.088.712
Fully vaccinated people: +171.555.556
Cases: + 34.887.505
Deaths: 688.316 thousand
Let’s continue believing and investing in the coffee culture!
Atlantica Coffee Team