Brazilian coffee physical market reacts and surges again

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The combination of coffee on ICE US above 134 cents and the dollar around BRL 5.67 undoubtedly favors the Brazilian physical market, which is rising sharply again. Arabica is flirting with the recent top and so remains very favorable for sellers, which facilitates the sales management of the coffee remainders of Brazil’s 2020 crop and the staggering of positions with future crops, especially in the case of the 2022 season.

The finest cups are currently trading around BRL 775/780 per bag in the physicals. With that, the description again approaches the reference of BRL 800 per bag, recovering bullish strength. The market gained momentum, despite the approach of the beginning of the arabica harvest in Brazil.

Good cup from southern Minas Gerais also went up and is indicated at BRL 750/755 per bag. The market also advances into a region favorable to sellers. The indications for business in advance with Brazil’s 2021 and 2022 crops increased to 765 to 775 per bag, respectively.

 Rio cup in the Matas de Minas region is already pegged at BRL 535/540 per bag, following the best cups. Some batches of early new coffee begin to appear with hard cup with 30% to 40% of defects. Buy prices at BRL 688 to 644 per bag, respectively. The greater aggressiveness of the domestic industry ends up helping to support the prices of weaker cup arabica.

Attention to the effects of the arrival of new coffee in the market. Conillon, for instance, lost again its relative value against arabica, rising less, which reflects the seasonal effect from the crop, normally stronger for conillon. The high dollar helps to mitigate that effect. In any case, conillon 7/8 is around BRL 445/450 in Espírito Santo. The local industry works on a hand-to-mouth basis, betting on the entry of the conillon crop, but it monitors the harvest progress and the export performance very carefully at this beginning of the new season.