Physical market vulnerable to dollar and pressured by harvest progress
The improvement on ICE and the recovery of the dollar ended up cheering the market, bringing a little more liquidity to business. Exporters are more aggressive as a result of increased foreign demand. They find no resistance on the sellers’ side, with growers taking advantage of the buying interest to make cash and cover harvest expenses. In that sense, domestic prices have changed very little. The supply progress of new coffee in the market ends up holding back bullish attempts.
In the south of Minas, good cup with 15% of defects is trading at BRL 475 in the physical market. Lots with a higher percentage of defects are around BRL 470 per bag. The indication for delivery and payment in September ranges from BRL 455 to 460 per bag. A lower price level, bring forward the negative slope for the short-term price curve. It is natural that prices fall because of supply growth.
Fine cup from Cerrado is around BRL 490 to 495 in the physicals, going down to BRL 465 to 475 for delivery and payment in September. In Mogiana, a very similar picture for both physical and forward business with September 2020 delivery. The idea for September 2021 ranges from BRL 500 to 510, but with no selling interest.
(chart: conillon ES price) Rio cup is exchanging hands at BRL 355 a bag in Matas de Minas region (20% of defects). Conillon, on the other hand, sustains a slight recovery and is around BRL 335 per bag, finding support in the interest in exports. The good progress of the harvest in recent weeks ends up playing against prices.