Physical market goes down after sharp gains in November
Physical coffee prices follow the external benchmark and decline in early December, after a November with significant gains. At the end of November, the best coffees regained a level around BRL 600 per bag, with finer cups trading above this important sell price benchmark. The fall on ICE along with the weaker dollar pushed coffee away from recent highs. Even so, prices are still far from the levels at the beginning of the period, when some descriptions of better cups flirted with the level of BRL 500 a bag.
Good cup in the south of Minas Gerais increased from BRL 530 to 595 per bag in November, sustaining an increase of 12% over the month. The description is trading at the beginning of December at BRL 570 a bag. Despite the 4% decline, the balance is still positive, which reinforces the idea of improvement in its level of performance.
Fine cup from Cerrado (MG) and Mogiana (SP) is currently indicated between BRL 615 and 610, respectively. This description even exchanged hands at BRL 630 a bag at the end of November, but ended up going down, following the movement on the NY exchange. In any case, the decrease was less significant than that observed with good cup. The justification is the lower available supply and stronger resistance amid growers, who are holding the best coffees for future sale, betting on high prices.
The ideas for forward commitment with good cups range from BRL 590 to 600 for Sep/2021 and BRL 610 to 620 for Sep/2022. A finer cup reaches BRL 630 to 640 for Sep/2021 and BRL 660 to 670 for Sep/2022 in Cerrado (MG) and Mogiana (SP). This market also lost strength, following the external decline and lower dollar.
The weakest coffees managed to sustain the gains of November, feeling less the external impact. Rio coffee with 20% of defects remains stable between BRL 405 and 410 per bag in the Matas de Minas region. Conillon type 7 ranges from BRL 395 to 400 in Espírito Santo. These descriptions are supported by domestic demand and are, therefore, less susceptible to dollar and ICE swings.