KCNY AND CURRENCY
On Monday (16), coffee prices in New York hit a 13-year high, at 271.80 cents per pound, and this Friday (20) recorded the week’s low, 247.70, with a fluctuation of 2410 points, ending the week down, at 250.75. Intraday movements have been significant for both Arabica and Robusta. The latter also broke through its highest levels in 16 years, given concerns about global supply.
The arbitrage between LONDON and NY continues to be narrow, closing the week at -21 LDNX24 x NYZ4, while the arbitrage between BMF and NY ICE closed at -20 on the December expiration date, demonstrating how Robusta has become more expensive than Arabica. On Monday (16), when NY ICE reached highs of 271.80, the NY x London arbitrage in the same maturities closed at -20.5, while BMF x NY ICE closed at -27.
Expectations of the arrival of rain in Brazil have helped to put pressure on prices, as have the next steps in the implementation of the European Union’s new anti-deforestation law (EUDR). The President of the European Commission, Ursula von der Leyen, is expected to propose a postponement or other temporary solution within the next few days. In any case, the implementation of the EUDR has had a bullish effect on coffee prices, since the volume bought by the EU before the law’s implementation has been higher than historical.
Prices for the December/24 expiry date since 01/01/24. Source: Barchart.
On the exchange rate, the dollar worked between R$5.3959 and R$5.5805, where the real showed some appreciation against the dollar, given the monetary policy decisions in Brazil and the US. The US FOMC cut the country’s interest rate by 0.25%, while COPOM raised the Selic rate by 0.25%, favoring the real.
Last Friday (13), the Commodity Futures Trading Commission (CFTC) released the Traders’ Position Report for the week ended Tuesday (10), in which the funds subtly reduced their long balance by 17 lots, to a total of 39,084, compared to 39,101 lots the previous week (03). On Friday (20), the report showed a significant increase in the long position, with an increase of 4,546 contracts on the week ending Tuesday (17), totaling 43,630 long contracts.
Certified stocks ended Friday (20) at 838,536 bags of 60 kgs, representing a drop of 17,723 bags in the last 7 days, with only 7,041 bags pending approval. A year ago, stocks totaled 440,853, representing an increase of 397,683 bags over the period.
December/24: Min: 247.70 | Max: 271.80 | Last: 250.75
BRL/USD: Min: 5.3959 | Max: 5.5805 | Last: 5.5198
*Data up to the completion of this report
WEATHER
Spring begins on September 22 at 9:44 a.m. and ends on December 21. Last year, there were three strong heat waves during spring and rainfall was well below the historical average in all brazilian coffee-growing regions.
This spring, the La Niña phenomenon will act with weak intensity and the climate forecast is for rainfall above the historical average in all coffee-growing regions, with the highest volumes expected in the South Minas, Mogiana and Garça regions.
Isolated showers typical of the time of year are expected over the next few days.
Rain forecast for the week:
South Minas region: between 4 and 10 mm.
Zona da Mata region: between 4 and 10 mm.
Cerrado region: between 5 and 10 mm.
Alta Mogiana region: between 4 and 10 mm.
Garça region: between 4 and 10 mm.
DOMESTIC MARKET AND FOB
The domestic market continues to show little liquidity, since the sellers are capitalized and often the buyers’ bases are far from the price offered, so the deals reported were on an as-needed basis. Conilon has already surpassed the price of low Arabica, being quoted at around R$1,470 to R$1,500, depending on the number of defects. There was also little liquidity on the FOB market and isolated trades. The volatility of coffee prices on the NY ICE has a direct impact on the differentials offered and, especially for large beans, the supply is different from the buyer’s expectations.
The requests from sellers in the domestic are as below:
- Strictly soft good cup running screen up to R$ 1,460.00
- Strictly soft fine cup running screen around R$ 1,540.00
- Rio Minas running screen around R$ 1,240.00
- 600 defects was quoted at R$ 1,330.00
LOGISTICS
The shortage of 20′ food grade containers remains unchanged this week, with an increasing number of shipowners failing to release these units or offering them late, out of line with ship deadlines.
The restriction of space on ships departing until October also remains a concern. We reinforce the need to send out Shipping Instructions in advance, including more than one carrier option.
- Maersk and Hapag-Lloyd could expand their fleet of container ships in an alliance announced earlier this year if maritime transport disruptions in the Red Sea persist. Since the end of last year, Houthi militant attacks have forced the companies to redirect traffic away from the Suez Canal, opting for longer and more expensive routes around Africa. (Source: Notícias Agrícolas)