KCNY AND CURRENCY
The coffee market in New York continues to reach its highs and reached the highest level since September 2011, reaching 275.05. Prices ended the week aggressively up, at 269.15 cents per pound, after a swing of 2,495 points. The low of 250.10 was recorded at the opening of Monday (23) and the contracts then took on a bullish trend. The scenario of extreme intraday volatility is becoming more and more common on the NY ICE.
The weather is a very important factor and is being closely watched by market players. In Brazil, rain is becoming increasingly necessary, given the flowering period, but the expectation of the arrival of rain and concern about the hot, dry climate in the country are a reality. In Vietnam, the Robusta harvest should begin in November, but it is possible that the drought that hit the country until the middle of the year has had an impact on total production. As a result, concern about the global production deficit is a bullish factor for prices in both London and New York.
The arbitrage between LONDON and NY continues to be tight, ending the week at around -20 LDNX24 x NYZ4, while the arbitrage between BMF and NY ICE ended at -25.7 on the December maturity, strengthening robusta prices against arabica.
Another point of support for the upward trend in prices is the logistical difficulties faced, such as a lack of containers, delays in shipments at Brazil’s main port (Santos), conflicts in the Red Sea and now strikes in the US, as Hedgepoint reiterated in its report.
Prices for the December/24 expiry date since 01/01/24. Source: Barchart.
In foreign exchange, the dollar worked between R$5.4041 and R$5.5980. On Monday, the real depreciated due to uncertainties about the Brazilian fiscal scenario, but over the course of the week the dollar lost strength against not only the real but also other emerging currencies.
Last Friday (20), the Commodity Futures Trading Commission (CFTC) released a report on traders’ positions in the market for the week ending Tuesday (17), in which funds increased their long position by 4,546 contracts, totaling 43,630 long contracts. This Friday (27) the report for the week ended Tuesday (24) was released, where the funds decreased their long balance this time by 1,982 contracts, now totaling 41,648 long contracts.
Certified stocks ended Friday (27) totaling 818,183 60kg bags, representing a drop of 20,353 bags in the last 7 days, with 51,731 bags still pending approval. A year ago, stocks totaled 446,518, representing an increase of 371,665 bags over the period.
December/24: Min: 250.10 | Max: 275.05 | Last: 269.15
BRL/USD: Min: 5.4041 | Max: 5.5980 | Last: 5.4346
*Data up to the completion of this report
WEATHER
The cold front arriving on the coast of the Southeast at the weekend may only cause light rain in the regions of South Minas and some towns in the Zona da Mata.
Temperatures are expected to drop between Saturday and Sunday in the coffee-growing regions, but the warm air mass is expected to return from Monday.
Meteorological models show that more frequent rains in the coffee-growing regions should only occur in the second half of October.
Rain forecast for the week:
South Minas region: between 5 and 10 mm.
Zona da Mata region: between 5 and 10 mm.
Cerrado region: no rain forecast.
Alta Mogiana region: no rain forecast.
Garça region: no rain forecast.
DOMESTIC MARKET AND FOB
The volume of business on the domestic market is below average for the period due to the high prices asked by sellers, who are very far from buyers’ bases. Conilon continues to appreciate in value, following Robusta prices in London, and the type 6 running screen was quoted at R$1,530.00, while the low Arabica is around R$1,400.00. On the FOB market there was no great demand, but some negotiations for upcoming shipments. With the leverage of the NY ICE, some sellers opened their differentials, especially for small beans, and some trades were made. The EUDR, the European regulation, is becoming more and more of a reality and the expectation that the market had of a postponement of the requirement disappeared over the course of the week, with confirmation that the rule will in fact begin in 2025. The European market has been imposing more and more obstacles on exporters, with chemical analysis of contaminants such as ochratoxin, EUDR, among other requirements, which has made exporters cautious.
The requests from sellers in the domestic are as below:
- Strictly soft good cup running screen up to R$ 1,500.00
- Strictly soft fine cup running screen up to R$ 1,580.00, depending on percentage of low grades and cupping profile
- Rio Minas running screen around R$ 1,240.00
- 600 defects was quoted at R$ 1,400.00
LOGISTICS
Ports along the Brazilian coast continue to face low stocks of 20′ containers. For this reason, cancellations have again been necessary. Even with the intervention of some importers, the shipping line MSC continues to be the most restricted, followed by Maersk.
Delays in ship schedules also continue to be common, along with the insufficient availability of storage spaces for units that have already been loaded. Terminals have almost never accepted early delivery.
Ships leaving in October already have little space available for the main destinations of North America, Europe and Asia.
- The continued high rates of delays or changes in the schedule of coffee export ships resulted in the accumulation of 1.861 million 60-kilo bags not shipped in August, according to a survey by the Brazilian Coffee Exporters Council (Cecafé). (Source: Globo Rural)
- According to Notícias Agrícolas, officials from President Joe Biden’s administration are monitoring labor negotiations, but are not seeking to broker a deal to avert a possible strike on October 1st at US East Coast and Gulf ports, which account for about half of the country’s maritime imports, according to officials on Tuesday.