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10-17-2022 Armenia Coffee Report

Good morning and happy Monday.

Having a nice warm cup of Colombia as we write this, we need it.

What a week that was. Wild options volatility combined with new shorts to move the market from 220.90 at the highs early in the week, to 195.65 by Friday. Serial options expiry was the early fuel and it moved the market through key supports 213.00, 210.00 and eventually through psychological support at 200.00 late in the week and we closed just off the lows. The Dec/Mar switch came under major pressure as well with the Dec being sold against options and narrowed from about 9 cents into 4.00 and stands at 4.25 this morning.

Volumes were heavy every day and what might have started as fund long liquidation likely turned to new fund shorts by the end of the week as the open interest started climbing in the last days of the week. The COT which only shows the market through Tuesday’s trading, and misses the most volatile trading of the week, showed large funds sold 1606 lots to be 39413 lots long while short funds bought 254 lots to end the period 6142 lots with trade as usual, the offset. We’re already anxious to see next week’s reports all things being equal.

Brazil gave the market some bearish news last week as weather and exports improved. Cecafe reported Tuesday that Brazil Sept green coffee exports rose 7.1% year on year to 3.1 million bags. Somar reported that Minas Gerais received 62.9 mm of rain or 243% of the historical average.

Vietnam reported exports of 1.73 MMT in the 2021/22 season that ended Sept 30 – a 4 year high. Vietnam is the world’s largest producer of Robusta coffee.

ICE Warehouse stocks fell to their lowest this year at 400,439 bags in total with 3436 bags pending grading.

The Brazil Real stands at 5.28056 and the Colombia Peso 4695.4. Continued problems with inflation here in the USA has most feeling the Federal Reserve will continue aggressive rate hikes keeping the dollar strong around the world.

192.45 next support in Dec. The market stands very oversold and in need of a correction.

We have some fresh Colombia Excelso and Brazil 2/3 screen 17/18 both literally just in the warehouse last week. How can we help you today?

All the best,
The Armenia Team