During the past week, NY futures traded within a narrow range of 1.55-1.60c/lb as the market faces the challenge of balancing a still tight supply-demand situation with an accelerating harvest. The stability of the dollar and the Brazilian real (BRL) in the 4.80-4.90 range has contributed to the current market dynamics.

In Brazil, the main Arabica regions are expected to experience dry weather next week, which will speed up the harvest pace. There is no immediate risk of frost until 4th August. Meanwhile, Conilon regions should receive more rainfall, leading to some blossom for the 24/25 season in ES and Bahia.

The current Arabica ICE certificates stand at 540k bags, while Robusta certificates have declined further to 5.3k lots.

In the KC market, prices have remained relatively stable, fluctuating between 155-160 c/lb during a holiday type week. There seems to be a prevalence of short-term algorithmic trading on the short side, probing for a potential further decline. On the long side, some arbitrage longs are creeping in due to the tightening cash arbitrage to robusta, alongside industry hedge replacement. The market chart is currently neutral.

Within the local market, trading conditions have been calm, with KC maintaining its bearish trend. Producers have backed off from prices due to the stable BRL, causing the offer and bid for volume to move further apart. While some volumes were traded to cover nearby shipments, overall, it was a quiet week for Arabica.

Exports have been slow, and with increasing differentials, there is speculation whether demand will shift back to the spot to fill any gaps. Conilon, on the other hand, continues to transact at interesting differentials compared to U, and demand remains consistent.

As for the weather, a cold front over the past weekend did not cause any significant impact, with the weather being chilly but not posing a threat of damage.

In the export market, Arabica demand has been relatively subdued as fob differentials move away from roaster ideas. However, Conilon demand remains steady as roasters seek cost-effective alternatives to cope with the tight robusta situation and address potential issues with existing robusta contracts.

Overall, the coffee market is experiencing a delicate balance between supply and demand, influenced by weather conditions and currency stability. Market participants are closely monitoring developments and potential shifts in demand to make informed decisions going forward.
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