Good morning and happy fall Monday,
There’s a little chill in the air here, and it’s definitely back to hot coffee in the mornings. We just made a fresh pot and while we’d love to have you here to share it with us, we’ll just have to wait a little longer to be safe. We’d be happy to share with you what we’re drinking now either whole bean or roast and ground, which is a bright Colombia mixed with some Brazil and Sumatra. Our colleague Izwandi keeps adding Sumatras to everything we do. Wonder why? We’re pretty sure that Izwandi believes there is no problem in the world that could not be made better, just by adding a little Sumatra Mandheling to it.
Monday finally saw us break and hold the move below important support at 11000, thought the market did not immediately break down. It took a few days but finally gave up and we made the move towards 10400. Thought it didn’t quite make it there it was “close enough” for the first try. From there the market rallied back a bit, but remains under pressure so far this morning. As we expected, fund liquidation was the driving force into trade buying who had to play with these size orders.
The disaggregated COT issued Friday Oct 2nd for trading as of Tuesday Sept 29th showed long fund still 50,616 lots long (-5383) and short fund 14,370 (+2787) so funds combined are still long about 36246 lots net/net down net 8170 lots. It feels like as of the end of the week, funds had lightened up as much as they wanted to and watching the early action so far this morning, they don’t feel as aggressive, so we’re thinking that as of now, they are not as aggressive in taking back shorts from here.
In Brazil, rains have still not changed their seasonal pattern, however, some really nice pictures from around Brazil started to circulate at the end of last week. Seems like a good flowering has been triggered and they are going to need rain from now on to continue the maturation process. It might take substantial rains to get the market to continue to liquidate some of the remaining spec longs.
Chart wise we’re still boxed in a 11000 to 10400 market with a break on either side, closing basis, would be significant enough to bring in stops. Our guess is for a bit of consolidation before another leg lower. Time will tell.
We’re here to help if we can. Please check the offer list for spot coffees we can send samples of if you’d like of any of the coffees shown there. Also please ask you trader for anything you don’t see there that might be of interest to you, especially shipments on a forward basis.
All the best,
The Armenia Team