KCNY AND CURRENCY
Coffee prices on the NY stock exchange have been very volatile. In another week of many intraday fluctuations, the low for the December maturity was recorded on Monday (09) right at the opening, at 238.10, while the high was recorded this Friday (13), 260.45, when the market broke through the resistance of 255.05, ending the week up at 259.45, recording a variation of 2235 points in the week. The volume of business on the NY ICE is too low for such expressive movements, while Robusta prices in London are up nearly 100% in the space of a year.
Concerns about the weather in Brazil, the largest Arabica producer, and Vietnam, the largest Robusta producer, continue to support prices in NY and London, as they are being closely observed by the market. The hot, dry weather in Brazil is being monitored, as rain in the coming weeks is extremely necessary and important for the development of the 25/26 crop, while in Vietnam there was a typhoon that may have damaged some coffee plantations, which is not a positive scenario after a year of crop failures in the country. In view of these factors, the arbitrage between LONDON and NY ICE remains tight and ended the week quoted at around -20, LDNX24 x KCZ4, while the arbitrage between BMF and NY ICE ended the week at around -28.
Prices for the December/24 expiry date since 01/01/24. Source: Barchart.
On the exchange rate, the dollar worked between R$5.5690 and R$5.6761, while the currency market continues to await the decisions of the American FOMC and the Brazilian COPOM, where a reduction in the American interest rate is expected versus a rise in the Brazilian interest rate.
The week saw the release of Cecafé’s report on August/24 exports, which set a record for the month, totaling 3.733 million 60kg bags. According to the report, “from January to August 2024, Brazil exported a record 31.892 million bags of coffee, a 39.2% increase on the 22.915 million bags shipped in the first eight months of last year”. The figures also show that Vietnam, the largest producer of Robusta, bought more than 485,000 bags of the variety from Brazil from January to August 24, while in the same period in 2023 the country bought only 79,000 bags, representing an increase of 514%.
Certified stocks closed this Friday (13th) totaling 856,259 60kg bags, representing an increase of 15,412 in the last 7 days, with 23,701 bags still pending approval. A year ago, stocks totaled 442,548, representing an increase of 413,711 bags over the period.
December/24: Min: 238.10 | Max: 260.45 | Last: 259.45
BRL/USD: Min: 5.5690 | Max: 5.6761 | Last: 5.5656
*Data up to the completion of this report
WEATHER
This weekend, temperatures will be high and the relative humidity will be low in all coffee-growing regions, increasing the risk of fire outbreaks. However, the weather should change from Monday, with the arrival of a cold front in the state of São Paulo.
The forecast indicates the start of rain in the coffee-growing regions from next week. Precipitation will begin in isolation in Garça, Mogiana and South Minas, and over the course of the week may also reach the Cerrado and Zona da Mata regions.
Rain forecast for the week:
South Minas region: between 10 and 15 mm.
Zona da Mata region: between 10 and 15 mm.
Cerrado region: between 5 and 10 mm.
Alta Mogiana region: between 10 and 15 mm.
Garça region: between 10 and 15 mm.
DOMESTIC MARKET AND FOB
On the domestic market, sellers remain capitalized and the buyer bases remain distant from orders. The high prices negotiated have also taken the liquidity out of negotiations, with no large lots traded throughout the week. On the FOB market, the differentials between MTGB and big beans remain distant, with some aggressive offers of small beans on the market, depending on the quality and month of shipment. For the Rio Minas market, buyers are holding firm, as most negotiations are on a fixed price basis, and there has been a certain opening of the differential in some offers, especially for small ones, although prices have varied between exporters. On the FOB market in general, with no large volumes negotiated or great demand, there were more one-off hedges.
The requests from sellers in the domestic are as below:
- Strictly soft good cup running screen up to R$ 1,450.00
- Strictly soft fine cup running screen around R$ 1,530.00
- Rio Minas running screen between R$ 1,190.00 and R$ 1,240.00 depending on the cup profile and quantity of low grades;
- 600 defects was quoted at R$ 1,330.00
LOGISTICS
The shortage of 20′ food-grade containers continues, and more shipowners are failing to release these units or pointing to a late supply that is out of sync with ship deadlines. MSC and Hapag-Lloyd are the most affected by this shortage.
The low availability of space on ships departing until October is also worrying. We emphasize the importance of sending Shipping Instructions in advance, including more than one carrier option.
- In 2024, the Port of Santos channel was closed for 161 hours and 30 minutes due to fog and other adverse weather conditions, more than double the 80 hours recorded in the whole of 2023, according to data from the Santos Port Authority. (Source: A Tribuna).
- In August, the Santos Port Authority (APS) finished dredging between warehouses 12A and 20/21, removing around 100,000 cubic meters of sediment and 500 cubic meters of jet-grouting residue. The work reached a depth of 14.60 meters, allowing larger vessels to dock. (Source: Transporte Moderno).