Good morning,
On the news feed this morning is an article “Coffee is more than just a hug in a big mug”. We agree with that messaging.
The market continued to move higher during the week, challenging overhead resistance and then breaking it. Increasing volumes fueled once again by fund buying kept the market going strong.
The disaggregated COT issued Friday for trading up to Tuesday August 25th showed long funds buying 4885 lots and now gross long is 50,067 and short funds also bought 2364 lots and their gross position is 15,036 for a net/net 35031 lots, and we would say again we’re sure that funds added to these numbers the remaining days of the week and appear to be doing so again this morning.
The market was helped by the general macro position. Early in the week, the US Federal Reserve stated their #1 priority was unemployment and they were unconcerned about inflation. That assisted traders who had been investing in commodity index funds as a way of expressing concern over rising inflation. Additionally, the Brazilian Real had a good week. It started the week at 5.575 when we were writing the report last week, as of the moment it stands at 5.428 that has probably removed some origin selling.
From here, upside resistance sits at the recent high 12890 and breaking that could send the market back to the December highs which for Dec C are around 14200 to 14800. The market is overbought at this level as we are writing the 9 day RSI stands at 70.95. Bulls would like to see a little consolidation before the next leg higher to keep momentum strong.
Again, we’d like to ask you to have a look at the offer list that accompanies this message, to see some of the fine coffees we’re carrying in the warehouse right now. We’d love to discuss our cupping notes or send a sample at your request.
All the best,
The Armenia Team