Firmer and more active physical coffee market

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Firmer and more active physical market

The physical coffee market takes advantage of the ICE rally and the dollar is still high, even after the correction, to sustain gains. Positive highlight on the best cups, supported by the aggressiveness of buyers, due to the lack of milds in the world. The logistical bottleneck, given the lack of trucks and space in warehouses, and the financial fear of exporters, facing the risk of margin calls in hedge operations, ended up weakening the buying momentum, but not enough to take away the strength of prices. And after an August of significant appreciation, the market starts September very firmly.

Good cup continues high and advances above the average for the period, which reinforces the good selling moment. As a result, it continues to generate opportunities for both producers to get liquidity and set a future margin. Good cup with 15% of defects in the south of Minas is indicated at BRL 600 a bag at the beginning of the month.

Fine cup from Cerrado gains additional strength due to the good external demand to replace mild cups. It is negotiated between BRL 630 and 635 in the physicals, a price level well above the average for the period. Market with good liquidity with both physical and future coffee.

Rio cup with 20% of defects is around BRL 400 a bag at the beginning of September in Matas de Minas region. The description supports a less significant advance than that achieved by the best cups and, therefore, remains below the average price for the period. The local industry is working on a hand-to-mouth basis, while external demand is calmer.

Conillon type 7 from Espírito Santo is trading at BRL 405 per bag. Although it supports gains and seeks a rapprochement with the historical average line, the description loses relative strength in relation to the best cups of arabica. A weaker differential in FOB exports (-4 cents against ICE Europe converted into cents) and cautious domestic demand justify the behavior of domestic conillon prices.