KCNY – ARABICA ON THE NY STOCK EXCHANGE (ICE Future US)
The Arabica coffee futures contract was quoted below 110 USC/lb. December 20 fluctuated between 109.05 and 114.80 USC/lb. The drop in prices reflects technical factors, concerns about demand due to new outbreaks of Covid-19 in the world, rains in Brazil and the weakening of the Brazilian currency.
BRL / USD EXCHANGE
The dollar operated at significant highs against the real during the week, exceeding R$ 5,6236 in the period. This Friday, the currency operates around R$ 5.55.
WEATHER AND CLIMATE
Throughout this week, there was rain in the producing regions, but in volumes below expectations and the historical average. With these rains, the second flowering is expected to bloom in a few days. The market is on the alert for high temperature and dry weather forecasts for the next few days and the effects of La Nina on producing regions. There is expectation of more voluminous rains and another more significant flowering for the middle of October.
DOMESTIC MARKET
With unattractive price levels and difficulties in delivering the harvest to warehouses, business in the domestic market remained at a standstill. Atlantica has adopted strategies to bring more speed to receiving coffees at warehouses.
Exporters were very slow on new purchases, most of which were under punctual demands from international buyers. The producers, betting on the recovery of the market, are unwilling to sell at the current levels, after all, a few weeks ago they made a good volume of sales during the highs of the market and of the dollar.
FOB MARKET
Slow market with few quotation requests.
SOUTH OF MINAS AND MOGIANA MINEIRA REGIONS
During this week we talked to 5 partner producers of Atlantica in the regions of South of Minas and Mogiana Mineira. All respondents have already finished the harvest, with good cupping profile and screen.
For the 2021/2022 crop, all of them expect a reduction in the harvested volume, considering the off-cycle year, the current crop conditions and the concern with the drought. They also reported the expectation of an increase in production costs for the next crop, considering the high cost of inputs, largely due to the devaluation of the real against the dollar.
INTERNATIONAL LOGISTICS
The reduction in the supply of empty food grade containers and difficulties with space on vessels remain a major challenge. To maintain the flow of shipments, Atlantica has been working with continuous planning and logistical alignment with shipowners, transporters and partners.
An important strategy has been done: to act in advance in bookings. An action in which the collaboration of customers in the advance submission of Shipping Instructions is essential. It is also important that the customer certifies with the shipowner, when closing the freight contract, if there are guaranteed units.
Lets keep believing and investing in the culture of coffee so together we can keep moving coffee forward!
Stay well,
Atlantica Coffee Team