Good morning and wishes for a warm Monday for you.
It’s a chilly early start to the week, classic autumn going into winter, frost on the grass and on the car this morning. Perfect weather for hot cup of PNG today. Yum!
Early last week the market continued to ride the momentum started on Friday last, from reports that Brazils next arabica crop has now been adversely affected from the lack of rain over important areas. And of course, with that, came widespread rains over the Brazilian coffee belt. It’s the contention of at least one large trade house that the damage is already done. There was a well followed technical trader applauding their findings as well.
When the market could not extend the gains, Tuesday saw the market reverse and move sharply lower. Perhaps it was the rains. More likely, we simply ran out of available technical based buying. The disaggregated COT issued Friday for trading as of Tuesday shows that the funds bought about 1211 lots (now 36205 long) and sold 202 lots (now 21204 lots short) for net/net 1009 lots bought for the period, that included a holiday day (Thanksgiving Thursday) in the mix.
Technically we’re seeing a double top form on our March chart, something we don’t see much in coffee. Underlying support at the 200-day ma around 11460 and the breakout move 11280. We see upside resistance at 121.00 then just under 125.00. This chart favors a test of the underside support initially.
Ice stocks up to 1,293,893 bags now that 224,847 bags of Brazils have come to the warehouses in the last two months. There are an additional 78,164 pending grading – probably include a bunch more Brazil.
We’ve had some very nice RFA certified Sumatra Mandheling come into Continental Warehouse last week. If we can send you a sample of these, or anything on our list that accompanies this report please let a trader know.
All the best,
The Armenia Team