Good Day,
It’s a rainy autumn Monday here in the Northeast. We’re staying warm with a cup of Organic Colombia today. The market was sideways early in the week unable to break 200.00 with any exuberance, and it seemed like there was good selling above the market waiting each time it tried. Thursday was a real dud of a day and then came Friday and the fireworks. Amidst a 12 cent range the market exploded over 200.00 (finally) and the market then attacked 205 before settling down for the weekend. Friday’s trading became a classic “outside day” with a lower low, higher high and a close above the previous day’s high. Technically bullish.
Over the weekend, traders were watching Brazil to see how much rain they would get. Some was expected, and most accounts have them getting a little better than expectations and more was expected to come during the week to come. The market then dipped trading briefly below the 200.00 as resistance became support the market came back and once again made a new high for this recent leg up. The RSI nearing overbought up here at the moment closing Friday at 66.
Rain is a very important factor in future trading but so is general coffee availability. Shipping remains a real struggle and origins previously shipping well now joining the group of places that are seeing bookings cancelled and containers harder to come by – notably for coffee Brazil and Colombia. Our rates in both places have doubled if we really want to obtain a container to ship. Again last week, the ICE coffee stocks had a few notable drawdowns and stand at 2,076,557 lower by another 46,523
bags. There are 7800 bags pending grading. Brazil still the biggest origin at 1,087,520 with 797,259 in Antwerp. That makes a total of 87,815 bags drawn down in just the last 2 weeks.
The disaggregated COT issued on Friday October 1 for trading as of Sept 28 show long funds bought 3397 lots to stand 55,895 lots and short funds bought 1192 lots to end 12,737 lots short. Trade sold about 6300 lots so they were the other side to the specs. Friday is option expiry for Nov options it will be interesting to see which strike the market gravitates to.
Technically the market probably needs to correct the overbought, but that can be done with some sideways action. We think the market has some real problems this volatility will remain for some time, and eventually we’ll make new highs.
We finally have some nice Guatemala HB Quetzeltenango in Continental, in addition to a very nice Brazil 17/18 from Mogiana, and some RFA 2/3 MTGB strictly soft fine cup coffees as well. Don’t forget the Colombia FTO that supports women. If you use Robusta, we have some Viet Wet/Polished in the warehouse now too.
All the best,
The Armenia Team