Good Monday morning to you.
Life in the time of Covid-19 continues. We hope you are all staying safe and taking the steps as recommended for your areas and neighborhoods by your local health authorities.
We’re doing what we have to, to honor the instructions of our local authorities. We’re humbled by the amount of emails, texts and instant messages we’ve received owing to our closeness to New York City, which is the hottest spot in the USA at the present time. As of right now, our whole team is doing as well as can be expected. We ask that you keep us in your prayers, as we keep you, and assist us in getting through this time.
Monday would be the last trading day above the 200 day moving average. By Tuesday, with another failed attempt at holding over 120 in July, the market turned lower when some amazing things happened in the macro world. The price of WTI crude, the landlocked crude oil futures with delivery in Cushing, Oklahoma – spot May did something we never thought we as traders would see – it traded as a negative number!! That meant, if you take delivery of the 1000 barrels of crude the contract provides, you didn’t have to pay for it but rather – the seller would give you money to take it away, so you get the1000 barrels and a check. There have been times in coffee, when the market has absolutely collapsed and with the differential on a physical contract, we thought this might happen (in our experience it hasn’t – but it’s come real close), but we’ve never seen this happen in our time in commodity markets, till now. The result reverberated in markets far and wide and traders re-evaluated consumption of all commodities across the board in this time of shelter-in-place orders happening around the world. The market quickly tested and then broke the 200 day moving average support at about 114.25 that had held till then. Subsequent trading saw first consolidation then a further extension of the move lower on Friday. Important support now rests at 104.00 in July and we’ll see if the market wants to test that the way it tested resistance at 120.00.
Volumes have been lighter than “normal” in this time of pandemic, but Fridays was good with size trading on both sides of the market. According to traders, they’re seeing good roaster support now, and origin not as aggressive. That will leave it up to spec to see if they want to continue to push the move. The COT released on Friday for trading as of Tuesday was mixed, showing players on both sides adding to their positions. Some signs the market is a bit oversold, but not the one we like to use the 9 day RSI that’s still in a trading range. So far today the market is inside the Friday range, something we’d expect. Next few trading days will likely set the tone for the move lower and test key support, or perhaps a move sideways while the market contemplates it next move. Market seems unsure what it wants to do as we write this.
We are pleased to report we have 100 bags of Colombian Supremo Scr 17/18 in Continental Warehouse in New York. If it’s something you use, we would recommend you consider talking to your trader about adding some to your next order. Demand for these coffees has been brisk and we’ve struggled to get them into warehouse before they’ve sold out each time. This is the first time we’ve got some in for a while, and we’re not sure when we’ll see the next coffee in the warehouse again for some time. At the moment we have nothing afloat behind these, though we might have a box for shipment in May. We’ve got some very nice Sigri AA from PNG, new crop Costa Rica Tarrazu, some really fresh Ethiopia Natural Yirgacheffe, Sumatra Mandheling, Kenya AA and AB and some fresh Panama as well, all ready to sample if you like. They join our usual selections of FTO, specialty and conventional coffees in the warehouse ready to go.
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