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Ordem Mínima
+55 31 98258-7114
Av. Princesa do Sul, 1885 | B. Rezende,
Varginha, MG, Brazil | ZC: 37062-447
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Weekly report – Brazilian Coffee Market – September 30th ~ October 4th, 2024

by Oct 4, 2024Market report0 comments

KCNY AND CURRENCY

Coffee prices in New York ended the week 11,800 points below the previous adjustment, with consecutive falls on Tuesday, Wednesday and Thursday. Despite the start of rains in coffee-growing areas, there is still uncertainty about the production of the next crop due to dry weather and high temperatures. The expectation is that increased rainfall in October will ease this situation, but doubts remain about the 2025 crop.  

On Wednesday (02/10), Robusta prices fell sharply, pressured by the entry of the Vietnamese crop, despite uncertainties about its production capacity. In addition, the possibility of a postponement of the European Union’s anti-deforestation law gave a boost to the sector, while the US port workers’ strike, along with rail congestion and the low level of the Mississippi River, continues to threaten the supply chain and grain exports. 

Prices for the December/24 expiry date since 01/01/24. Source: Barchart. 

On the foreign exchange market, the dollar worked between R$5.4033 and R$5.5190. The conflict between Israel and Iran has brought uncertainty and instability, and as a result, there is a large movement of players to leave their assets in the world’s safest currency, the dollar. In addition, Brazilian fiscal data still shows a large primary deficit and has caused the dollar to rise against the real. In addition, payroll data was released today (October 4), in which job creation in the United States in September came in much higher than expected. The consensus was that 147,000 jobs would be created, but what was released was 254,000 jobs.  

This Friday, the Commodity Futures Trading Commission (CFTC) released a report on traders’ positions in the market for the week ended Tuesday, where funds reduced their long position by 924 contracts, bringing the total to 40,724 long contracts.   

Certified stocks ended this Friday (04) totaling 804,576 60 kg bags, representing a drop of 13,607 bags in the last 7 days, with 54,066 bags pending approval.   

December/24: Min: 251.40 | Max: 272.15 | Last: 257.35   
BRL/USD: Min: 5.4033 | Max: 5.5190 | Last: 5.4590  

*Data up to the completion of this report 


WEATHER

A cold front passing between Friday and Sunday along the coast of southeastern Brazil could cause light rain in some coffee-growing regions.  

Meteorological models show that the passage of the frontal system should not weaken the warm air bubble acting in the Southeast. However, with the onset of La Niña, the cold front that arrives after October 10, combined with the high temperatures in the Southeast, should cause heavy rains in all coffee-growing regions from October 10 to 17.  

Rain forecast for the week:  

South Minas region: between 40 and 60 mm.  

Zona da Mata region: between 50 and 70 mm.  

Cerrado region: between 20 and 30 mm.  

Alta Mogiana region: between 20 and 30 mm.  

Garça region: between 20 and 30 mm. 


DOMESTIC MARKET AND FOB

The domestic market remains as it has been in recent weeks, without many offers due to the oscillation of the NY ICE. Producers are aiming for better prices while the reality of the market does not meet their expectations, keeping the liquidity low. This volatility has also not helped FOB business, which remains stuck due to the differentials that make business unfeasible. Occasional back-to-back deals are being made, but with no long strings offered.  

 The requests from sellers in the domestic are as below: 

  • Strictly soft good cup running screen around R$ 1,460.00 
  • Strictly soft fine cup running screen around R$ 1,500.00 
  • Rio Minas running screen around R$ 1,200.00 
  • 600 defects was quoted at R$ 1,150.00 

LOGISTICS

For yet another week we’ve had schedule cancellations due to a lack of containers, all with the same shipowner: MSC (Mediterranean Shipping do Brasil).  More than 15 20-foot containers were not available.  

We are also warning of the severe space restrictions on ships leaving in October and destined for North America, Europe and Asia. Even spot-rate spaces are in short supply. 

  • Port workers at U.S. East Coast and Gulf ports have temporarily suspended the strike that began last Tuesday, resuming cargo operations. Negotiations on a new contract continue, with a deadline set for January 15. (Source: A Tribuna) 
  • At TOC Americas 2024, held in Panama, representatives of the global container chain discussed the sector’s progress and challenges. This year’s event focused on the need to rethink business models, reconfigure trade routes and reduce greenhouse gas emissions.