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12-5-2022 Armenia Coffee Report

Good morning and happy Monday.

Its chilly here in the Northeast with frost noted on the lawn as we left for work today. Hot Colombian medium roast takes the chill off.

Consolidation was the name of the game last week in coffee. Here in the USA, talk that inflation is starting to moderate, has folks believing that demand might pick up some.

Analyst Maja Wallengren issued a report last week calling for Brazil to produce 50-56 million bags. He cited “production areas continue to be adversely affected by weather”. “There was massive defoliation that left the trees unusually weakened and without sufficient nutrition to sustain cherry development from flowering”. This number is on the lower end of the scale with some such as Rabobank predicting up to 68.6 million bags. The Brazilian government has not yet published its first estimate.

The commitment of traders showed that long funds sold 9 lots while short funds bought 1902 lots. The offset as usual was trade. Short fund still has a large 43546 lot position.

The Brazil Real is 5.23816 while the Colombia Peso is 4765.2. The Real is in the middle of the recent range.

ICE warehouse stocks totaled 609267 while there are still 445,360 bags pending grading.

Roberto Velez resigned his position as CEO of the Colombian Coffee Federation last Friday, reportedly at the request of the new President there, who wanted to work with his own appointee. “Velez’s resignation followed a recent coffee congress in Colombia during which he presented the historic results reached during his tenure. I am leaving a united FNC, a Steering Committee that knows how to work as a team and has a clear institutional direction, a National Congress of Coffee Growers that knows where it is going and promotes long-term policies,” Vélez stated”

The market trading near key support around 16000, breaking would give us a test at new lows for the contract. Bulls would like to see a little more consolidation than a measured move higher.

How can we be of help today?

All the best,
The Armenia Team