Porto Alegre, January 12th, 2024 – With the lows on ICE US and the dollar moving sideways, the prices in the Brazilian physical coffee market have been affected. The slight appreciation in the FOB Santos differential was not enough to mitigate the negative pressure from the decline in external prices. As a result, the price of good cup not only lost the level of BRL 1,000 a bag but also became closer to the reference of BRL 900 a bag, changing the performance level downwards.
This movement ended up changing the price curve, with a good cup from southern Minas Gerais starting the year 2024 at a lower level than the average reached in December 2023. The change in the route is confirmed, interrupting the upward sequence that was extended since last September. In any case, even after the negative correction, the purchase idea is around BRL 945 a bag in these first days of 2024, which is equivalent to USD 193 per 60 kg bag. It remains slightly above the 5-year deflated average price for the month of December (BRL 908) and still in a favorable region for sellers, who should continue to stagger sales and take advantage of rising volatility.
For the future crop, the idea for prices set in advance is around BRL 955 to BRL 965 a bag for delivery and payment in September 2024, which is equivalent to USD 195 a bag or 147 cents per pound. Although it is below the BRL 1,000 a bag obtained a few weeks ago, it is still a price higher than the deflated average between 2019 and 2023 for the month of September, which is around BRL 915 a bag. Given the financial volatility and production signs, producers need to dilute risk by managing sales, especially those that are poorly sold for the next crop.
It should be remembered what happened at the start of Brazil’s 2023 crop, when selling pressure increased due to low commitment in advance by producers, which helped to intensify seasonal pressure with the arrival of new coffee to the market. Brazil could reap a larger crop in 2024, especially of arabica, and most producers are still very exposed at the crop arrival.
Fine cup shows some resistance and remains indicated slightly above the level of BRL 1,000 a bag but is far from the recent top, when it exchanged hands between BRL 1,090 and BRL 1,100 a bag. Arabica Rio cup costs around BRL 820 a bag, also below the high of BRL 855 a bag set in December.
Conillon continues to be highly valued and close to the top. External interest, after new frustration in the Vietnamese crop, ends up forcing greater aggressiveness among domestic industries, which supports prices. Sellers remain on the defensive, which reinforces the firmness of prices. Type 7/8 conillon in Colatina, Espírito Santo, costs around BRL 775 a bag, very close to the level of BRL 800 a bag. Although the market remains favorable for sellers, it is important in the sales strategy to be careful with the transition between crops, which begins earlier for conillon, with its harvest starting in March, earlier than normal.
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