Happy Monday to you,
It’s a chilly, windy morning here in the northeast with wind chills under 0 degrees. HOT coffee is the order of the day.
Interesting week last week where perhaps, the market got a little ahead of itself on a couple of occasions.
We’ve all known that this week, commodity fund selling should be coming to the market as funds “rebalance” their positions, something they do every year in the first weeks. The idea is to move index fund money from the players who had a great year, into others that underperformed hoping that this year is “their year”. Coffee was in the top 3 performers for most of 2021 so it only figures 2022 the move will be out, meaning selling. Folks who know are saying about 22,000 lots of selling by the end of this week.
So, with all that selling the market should come down right? Well twice last week, short term players sold the market hoping that would be the case, only to watch their stops being run and jobbers bought the market into their weak positioning. Friday in fact was one such day giving us the highs for the week and another week where the low tested and held support at 220.00 and then up to resistance at 240.00, which also held.
Now here we are this week, and the selling is supposed to be in the market and so far early on a Monday it appears to be so. The market has known this selling is coming and so some buying has no doubt waited for it. If you have to buy why not, no? Usually, it’s the last 2 or so days that the selling exaggerates the market action, we’ll see as it plays out this time. In any case it should be hard for the market to mount any kind of rally during this week as there will be selling to meet it should it try.
The commitment of trader’s report followed a similar pattern of the last few weeks. Long fund again decreased their long by 1843 lots to 54,204 lots long. Short fund also decreased by 543 lots to 6,829 lots. Trade net/net bought about 186 lots.
ICE warehouse stocks were again lower for the week and stand at 1,506,480 of which 678,847 bags were Brazil of those 534,605 were in Antwerp. There are 3,445 bags pending grading.
We know we’ve said this over and over again, but logistical problems continue to give the market real troubles. In Colombia and Brazil, we were told shipments had to be delayed because there were no containers available at that time. In Indonesia, things continue very difficult here it’s not about
containers but space availability. A story about difficulties in Brazil quoted officials who thought things would continue difficult until the 2nd half of 2022. We’ve seen these hopeful statements all during this time of difficulty and hope that these officials are right but fear this is going to continue to be not just a hassle, especially in a market no longer encourages carrying coffees, making early shipments costly as well, if you can do them.
We have some very nice RFA Guatemala and an FTO Honduras in Continental. Some new Bali Kintamani just arrived into Continental end of last week. We have a very nice lot of Ethiopia Sidamo Grade 3 that we just had on the cupping table, really nice berry notes. And if you use Robusta, we have a nice Vietnam Wet/Polished Robusta now in Continental as well.
How can we be of help?
All the best,
The Armenia Team