KCNY – ARABICA ON THE NY STOCK EXCHANGE (ICE Future US)
Between 29-Sep and 02-Oct, the Arabica coffee futures contract followed the downward trend of recent weeks. The prices of December 20 fluctuated between 114.75 usc / lb and 104.90. About a month ago, prices exceeded 135 usc / lb.
The drop in prices reflects technical factors, the occasional rains in Brazil, the weakening of the Brazilian currency, American elections and concerns about demand due to new outbreaks of Covid-19 in the world.
BRL / USD EXCHANGE
The real fluctuated during the week between 5.5138 and 5.6779. In the Brazilian scenario, the government’s announcement on Tuesday (29) of new spending on the new social program “Renda Cidadã” – without indicating cuts or a proposal for tax reform – brought concerns to investors, pressing the currency devaluation in its highest level since May.
On Friday morning (2), the dollar retreated to 5.6151 reais in the sale, with the increase of American electoral uncertainty after the news that President Donald Trump tested positive for Covid-19. Later on, the currency continued to operate on Friday at around 5.65.
The flow of coffee business in the domestic market was stuck. Coffee growers are not eager to sell their production at current levels, despite the sharp devaluation of the real. Payment terms for purchases are longer. There are few exporters making new purchases, with some occasional deals matching demand. The inflow of coffee into warehouses and trucks is normalizing.
Little active market. The increase in cases of Covid-19 in the world has renewed market concerns with the resumption of preventive measures and the recovery of economies.
The days have been extremely hot and dry in the southeast and mid-west of Brazil. This spring’s temperatures are above the average of previous years. In the South of Minas, temperatures exceeded 35ºC. Low and very punctual rains are forecasted for the weekend in some producing regions. The heat wave is expected to end only in the second week of October.
ALTA MOGIANA REGION
During this week we spoke with 8 coffee growers, partners of Atlantica, in the Alta Mogiana region. All respondents have already completed the 20/21 harvest, with good cupping profile and high screens. They reported opening of the second flowering, triggered by the rains of the previous week. The producers highlighted that this flowering is more intense than the first one. In the region, it has precipitated about 10 mm in the last 10 days.
The current weather conditions and forecasts for the next few days are factors of great concern for the production of 21/22, of off-cycle, and already weigh in the intentions of the growers to sell the next crop in the forward market. They also reported an increase in the cost of inputs.
The difficulty of space on vessels and the scarcity of standard food containers were a significant challenge for the shipments of September, a scenario that should extend to the next months. Shipments in October to most destinations are already sold out.
We reinforce the request for customers to send the Shipping Instructions in advance and to certify with the shipowner when closing the freight contract, if there are guaranteed units. Acting in advance on reservations is essential for shipments to take place without delay.
Lets keep believing and investing in the culture of coffee so together we can keep moving coffee forward!
Atlantica Coffee Team