Accelerated external flow and weak coffee differentials


Accelerated external flow and weak differentials

The flow of Brazilian shipments remains high, having reached 4.1 million bags in October, according to Cecafé. With that, the shipments for the first 4 months of the 2020/21 business season (Jul/Oct) amount to 15 million bags, up 8.1% from the same period of the previous season. It is also the best first quarter of the business season for the last 5 years. Coffee export revenue reaches USD 1.8 billion, up 4.9% from the same period of the previous season.

The gains on ICE ended up weighing negatively against export differentials at Brazilian ports. The record crop reaped this year and the strong flow of shipments at the beginning of the business season also played against export differentials. In this sense, FOB Brazil differentials remain weak.

Good cup screen 14/16 is trading at -28 against ICE U.S. Even though the current differential is well above the level reached in early September, when trading at -40 cents, it is still well below the average reference for the crop arrival between -20 and -21 cents against ICE U.S. In comparison with the same period last year, the depreciation of export differential is even more visible. In November 2019, this description was trading at the port of Santos at -15 cents against the NY benchmark.

Fine cup 17/18 is exchanging hands at -17 cents, while rio 17/18 cup is pegged at USD 80 per 50-kg bag (flat price). Finally, conillon 13 up in Vitória is trading at a premium of +1 cent against ICE Europe converted into cents/lb. Conillon remains very firm and weakens external competitiveness, especially with the advance of Vietnamese exports.