Happy Monday to all,
It’s a cold rainy Monday here, we might even get a bit of the “wintery mix” before the day is over. UGH.
The market took a breath last week. Lower volumes than more recent weeks with players on both sides taking a step back to evaluate what their next steps should be.
As we expected last week, short funds did indeed sell many more lots and are now at a historically high volume mark for their position. According to the COT issued Friday for trading as of Tuesday Jan 17th long funds sold 3,665 lots and stand 19,005 lots long but those short funds are now 62,945 lots short after selling another 9,205 lots, a huge number. Trade was most of the offset buying about 8000
lots. Indexes bought about 7000. Folks like to aggregate the fund positions, but that’s not how they trade and getting out of 63,000 lots will be interesting.
ICE warehouse stocks stand at 851,625 bags with 63,160 bags still to grade. It’s still worth noting that a fair amount of the recent gradings are failing.
The Brazilian Real is a little weaker than this time last week at 5.20541. Colombian Peso is a bit stronger at 4595.0.
Brazil’s Conab said the 2023 coffee harvest should be 54.94 x 60 kgs bags. Up 7.9% from the previous year. Arabica production will reach 37.43 million bags up 14.4% from 2022 driven by better production is Minas Gerais.
No origin has been offering aggressively, especially Brazil where diffs have moved to historically high levels. One seller told us last week that “only grinders have a minus sign in front of the diff currently, even Rio Minas is plus”
The market has been working its way back to resistance at about 160.00 where breaking that the next level would be closer to 175.00. Underlying support still lies just above 140.00. We believe that short spec number will prove hard to deal with from some point it’s just that point isn’t quite here.
Again, we have our friends in PNG asking us for interest in B’s, if that could interest you, please let us know. We have some Brazil Grinders in SuperSacks in RPM today. We have a split box of Colombia arriving fresh on the 26th.
How can we help today?
All the best,
The Armenia Team