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181 million credit crisis! Brazilian traders 'debt raises market concerns

Published: 2026-01-15 Author:

Last Updated: 2026/01/15, According to media reports, the Brazilian currency, the real, has been affected by Brazil's fiscal problems recently, resulting in continuous depreciation. Although the real rose slightly by 0.21% at yesterday's close, the exchange rate of the US dollar against the real remained at 6.056. It is reported that after rising for five consecutive trading days and setting a new record high, the US dollar

According to media reports, the Brazilian currency real has been depreciated recently due to Brazil's financial problems. Although the real rose slightly by 0.21% at the close of trading yesterday, the exchange rate of the dollar against the real remained at 6.056.

It is reported that after five consecutive trading days of gains and new record highs, the exchange rate of the US dollar against the real began to stabilize. Although the dollar fell in global markets, the exchange rate remained high above 6.00 because of concerns about Brazil's fiscal policy and news of Mr Trump's threats to the BRICS countries.

This also makes the Brazilian coffee industry face many challenges, and exchange rate fluctuations increase the uncertainty of export earnings, which puts great financial pressure on coffee growers and exporters. Although the devaluation of the real can make Brazilian coffee more price competitive in the international market, it also increases domestic costs. With the devaluation of the real and the geopolitical influence, the prices of imported fertilizers and pesticides have risen sharply, increasing the cost of planting and operating.

In addition, in terms of exporters, the devaluation of the real increases huge exchange rate risks. in order to cope with exchange rate fluctuations, many exporters have to use financial instruments (coffee futures) to hedge to reduce losses, but at the same time push up futures prices. it also increases operating costs.

Recently, it has been reported that due to exchange rate problems, high Arabica coffee futures, shipping delays, and the impact of drought on Brazil's coffee crop, Brazilian Atlantica and Cafebras traders have delayed delivery and taken debt restructuring measures, causing market concern.

According to reports, the exporter currently owes buyers about 500000 bags, or about 30, 000 tons of coffee. In addition, the two trading companies have applied to the court for debt restructuring, which also exposed Brazilian banks to a credit risk of around 1.1 billion reais (US $118 million), which provided these traders with prepaid items (ACC) related to future coffee exports.

It is understood that Atlantica Coffee, Cafebras and Ally Coffee, three coffee trading enterprises are subsidiaries of the Montesanto Tavares Group, mainly engaged in Brazilian coffee trading business, occupy an important position in the Brazilian coffee market, accounting for 8% of Brazilian coffee sales.

In court filings, Atlantica and Cafebra said the recent price surge was the latest challenge in their operations, as they led to margin calls for hedging operations and tight cash flow. At present, Atlantica and Cafebras are still operating normally, but they are required to negotiate most of their debts in court, which could lead to bankruptcy proceedings if the negotiations are not successful. This has also caused concern in the coffee market, with many coffee importers worried that they will not be able to receive orders on time.

In addition, the spot price of coffee in Brazil soared to a 26-year high. In the first half of November, the spot price of Arabica coffee was around 1500 reais per bag, but in the second half of the month, the spot price rose sharply to 1805.68 reais per bag. Robusta also rose to 1570.79 reais per bag.

As a result, the market is concerned that as prices remain high, other Brazilian exporters may run into financial difficulties, affecting their coffee supply and causing coffee prices to continue to rise. And due to the instability of prices and exchange rates, international buyers may demand lower prices or turn to other relatively stable countries to buy coffee. This will further depress exporters' profits and could lead to a decline in the share of Brazilian coffee in the international market.

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