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Happy morning and happy Monday,

During last week’s short work week, it appeared the market would try and consolidate recent activity.  Sideways action dominated the trading, though the market never really moved strongly away from key support at 1.0900 the 200 day moving average in March.

We come in this morning to see that market has moved strongly through that 1.0900 level and moved to test the next support at 1.0600, the corrective low during the move from where the rally started at .9600 up to the high of 1.4245.  From here, breaking 1.0600 would likely give the rest of the rally back at this point as we continue to see strong fund-based selling, likely the longs made during the rally move.  The disaggregated COT with futures and options showed the fund only liquidated about 2700 lots, strong slowdown in their recent trading.  This break of major support in the 200 day, should it hold, should accelerate the buying once again.

This morning the Brazilian Real continues its struggles, down to 4.2156 it’s not helping coffee right now, though it’s not bringing aggressive offers from Brazilian shippers.

Our brokers have noted good options trade, likely buying by roasters as the attempt to catch up with origin now that the market has come this way down.

All across origins right now, fair amount of coffee was sold into the recent rally to 1.4245.  That means there’s less available moving forward.  Buyers have bought, sellers have sold, that should be good for the market, no?  Meantime shippers try and accumulate the coffee bought from the producers, including business that took place before the rally began.  Colombia has seen diffs move up strongly as the market has moved lower, available coffee left from the main crop not aggressive here.  2nd harvest is months away still.  Brazil too pretty well sold of what was available, now waiting on the coffee from the new crop in the summer, they are also not aggressive here.

We have some Colombia EP in the warehouse late last week, we’re expecting the samples early this week.  Supremo 17/18 which are also certified DD also just in the warehouse.  We have some fresh Guatemala HB EP just into the port, and some Vietnam WP Scr 16 arriving early Feb (1st at the moment).  They join our usual standard; the offer list is attached to this email.  Please have a look and if we can be of help please let us know.

The Armenia Team