Very firm Brazilian conillon coffee

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Porto Alegre, February 23, 2024 – The Brazilian physical market continues with valued prices. Volatility on ICE US and the dollar guarantees support to prices. Good cup from the south of Minas is trading at BRL 1,025 per bag (USD 207.58 per bag), 2.5% above a month ago. However, unlike New York, which maintains gains in the annual comparison, the physical price is nominally 11% lower than in the same period last year. The justification for this difference is the currently weaker export differential. The differential on the purchase of MTGB good cup (14/16) is currently around -17 cents FOB Santos against ICE US. A year ago this coffee was trading with a premium of +1 cent against NY.

The fact is that there is still plenty of arabica coffee in the growers’ hands, which increases sales interest and leaves the external base weaker at the beginning of 2024 in Brazil. Furthermore, the dollar against the real a year ago was sold at around BRL 5.17, compared to BRL 4.93 currently. This sum of factors explains the negative detachment and the different behavior between the indication on the commodities exchange and the sell price in the internal physical market.

Brazilian conillon is pegged at BRL 840 per 60-kg bag for type 7/8 in Colatina in Espírito Santo and remains highly valued compared to the same period last year, when it exchanged hands at BRL 675 per bag. Strong external demand helps to reduce internal availability and guarantees support to prices, which are 24% above those charged in the same period last year. The comparison in real terms (deflated price) reinforces the exceptional moment for conillon from Espírito Santo, which not only maintains a wide distance from the 5-year average (2019 to 2023) but is also trading above the market peak in 2022.

The arrival of Brazil’s 2024 conillon crop in April should bring pressure on prices, which tend to move away from their peak. This movement could be more intense if a better crop is confirmed in Indonesia and with the gradual “normalization” of the flow in the Red Sea. However, external demand should still remain strong, which alleviates the effect of seasonal pressure from the arrival of new coffee on the market. In any case, robusta growers need to take advantage of the excellent moment a little more by making some forward trades.

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