Weaker differentials and larger spread in FOB Brazil for coffee

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        Porto Alegre, February 26, 2021 – The FOB Brazil market for coffee is reducing liquidity, with a greater distance between buy and sell indications. Buy differentials of foreign roasters ended up widening, with the industry seeking realignment with the strong rally on ICE US. On the other hand, sellers remain very withdrawn, without changing their prices much. The spread ended up halting business.

       The buy indication for near shipment is -28 cents for good cup 14/16 (MTGB). Sellers ask -25 cents against ICE US. The external bases have fallen, even on the seller’s side. Besides the ICE gains, another factor that justifies the weakness in the export basis is the relatively firm dollar. The description exchanged hands at -22 cents at the end of the last week, even so it is still far from the -40 cents of negotiations in September last year, at the start of the record crop of Brazil’s 2020 season.

         The idea for fine cup 17/18 is between -17 and -15 cents, while semi-washed MTGB cherry ranges from -15 to -12 cents against ICE US. Rio cup 17/18 is at USD 90 per 50 kg (flat price) and conillon 13 up also dropped to the premium of +1 to +2 against ICE Europe converted into cents/lb. That coffee happened to change hands at +5 cents a few days ago.

        The idea for the 21/22 (new) crop with shipment from July/21 is -28 for good cup MTGB, while fine cup 17/18 is around -17 cents/lb against ICE US (indication based on sales in the physical market). The weaker differential, associated with Brazil’s smaller crop in 2021, ends up driving sellers away.

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