KCNY AND CURRENCY
Coffee prices on the New York Stock Exchange continue the volatile scenario seen in recent weeks. On Monday, the market gave back the previous week’s gains and hit the week’s low of 243.35. However, over the course of the week, prices went up again, reaching a high of 257.10, totaling 1375 points of volatility. Even so, prices closed this Friday (11) down at 252.50 for the December/24 expiration date.
The market has sustained itself at high levels in the face of the expectation of a tight global supply. Although rains have been recorded in the Brazilian producing regions and more volumes are expected in the coming days, there is concern that the dry period may have damaged production in the 2025 cycle.
Prices for the December/24 expiry date since 01/01/24. Source: Barchart.
On the foreign exchange front, the dollar worked between R$5.4209 and R$5.6527. Fiscal uncertainties continue to surround the domestic environment. During the week, Gabriel Galípolo, Lula’s nominee to take over the presidency of the Central Bank from next year, was auditioned and had his nomination approved by the Senate. Galípolo maintained a discourse aligned with the inflation targets set by the National Monetary Council. However, on Friday (11), the president made statements that increased players’ fiscal concerns. The statement was about a proposal to extend the income tax exemption to a larger part of the population, but in order to balance the collection, there would be the creation of a kind of “millionaires’ minimum tax”.
In addition, monitoring of possible future US interest rate cuts became more intense following divergent data released during the week. The CPI (Customer Price Index) showed an unexpected year-on-year rise, still indicating a heated economy, while applications for unemployment benefits also rose, indicating a slowdown in the labor market. Despite this, market expectations are still that there will be interest rate cuts, although smaller ones, in the coming meetin
The Commodity Futures Trading Commission (CFTC) released this Friday (11) the Traders’ Position Report for the week ended Tuesday (08), where funds reduced their long position for the second week in a row, by 4,701 contracts, totaling 36,024 long contracts.
Certified stocks ended Friday (11) at 815,087 60 kg bags, with 63,031 bags still pending approval. A year ago, stocks totaled 445,442, representing an increase of 369,645 bags over the period.
December/24: Min: 243.35 | Max: 257.10 | Last: 252.50
BRL/USD: Min: 5.4209 | Max: 5.6532 | Last: 5.6081
*Data up to the completion of this report
WEATHER
Historically, the rainy season in coffee-growing regions begins in mid-October and lasts until mid-April. This year, the rains are starting punctually, with typical precipitation already occurring in all regions over the last two days. The cold front forecast for southeastern Brazil this weekend should intensify the moderate rainfall regime over the next few days in all coffee-growing regions.
Rain forecast for the week:
South Minas region: between 40 and 60 mm.
Zona da Mata region: between 50 and 70 mm.
Cerrado region: between 40 and 60 mm.
Alta Mogiana region: between 40 and 60 mm.
Garça region: between 40 and 60 mm.
DOMESTIC MARKET AND FOB
The domestic market continues with negotiations at a standstill, as few players are willing to pay the levels requested by sellers, so most buyers are keeping their offers below those requested and making deals as needed. On the FOB, the differentials for small screens have opened and a greater number of deals have been made. Negotiations for January/25 onwards are flowing more smoothly. The market is still awaiting the European Union’s decision on whether to postpone the EUDR requirement, which, if confirmed, will only be mandatory from the end of 2025. In the meantime, exporters remain cautious on long strings to the EU.
The requests from sellers in the domestic are as below:
- Strictly soft good cup running screen around R$ 1,450.00
- Strictly soft fine cup running screen around R$ 1,540.00
- Rio Minas running screen around R$ 1,230.00
- 600 defects was quoted at R$ 1,360.00
LOGISTICS
The ports along the Brazilian coast continue to face low stocks of 20′ containers and, as a result, for another week we have had postponements. Some customers are already looking to ship in 40′ containers, which are in greater supply, especially the high cube types.
Changes to ships’ schedules, either delays or anticipations, or even omission from the schedule, also continue to be a constant factor. Port terminals have their yards full and early delivery has almost never been accepted.
- This week, Cecafé released a summary of coffee exports for September/2024, in which Brazil exported a record 4.464 million 60kg bags in the month, a volume that represents growth of 33.3% compared to the same period in 2023, when 3.348 million bags were exported. Of the volume exported last month, 911,881 bags were Conilon (Robusta).
- Hurricane Milton, which hit the US coast, caused the temporary closure of the region’s airports and ports. This scenario is likely to result in delays and interruptions in the global logistics chain.