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3-7-2022 Armenia Coffee Report

Good morning,

It’s a really nice early spring morning here in the northeast. We’re drinking a blend of Honduras, Sumatra and Colombia organic this morning, really nice.

The coffee market, as dynamic as it can be, it not immune from outside influences, especially when they themselves are as dynamic as we’ve seen in recent days. Russia has moved into a war with Ukraine and the world has reacted to it. Sanctions, new regulations, and all that has happened in recent days, has traders and money looking for safety. Since the market made its recent high on Feb 11 at 260.45, the market has done little but works lower day by day with a few corrections along the way and finished last week at 224.15 that’s a heck of a correction of the total move higher. Likely it was long fund getting out of profitable positions, possibly as offset against some not so profitable as volatility in the world is very high right now. The COT issued Friday Mar 4 for trading as of Tuesday Mar 1 showed funds selling over 7000 lots (long funds sold 5322 and short funds added 1835); Best buyers were trade likely roasters who had an ample opportunity to catch up buying a little more than 10,000 lots. What’s been interesting a pretty strong Brazilian Real (currently 5.0488) has not had much if any effect on the C, or so it seems.

Nothing has really changed in coffee. Shipping and production problems continue. This morning, Colombia noted their production for Feb was down 16% with exports down 23% and they only exported about 980,000 60 kgs bags. For the 12 months Mar 21-Feb 22 exports were 5% lower from 12.7 million bags to 12.1 million bags now. We were advised last week that as of May, shipping a container will more than double in price from what is really our only shipping partner there right now. They will go from $3900 to $9000. Other rates are as high as $16,000.

By our standards the market is not over sold as yet, hasn’t got close but it bears watching. Key 220.00 support held on the first attempts at it, but can it hold another time if we find ourselves down
there? Breaking that could mean a test of the 200-day moving average currently around 205.53. A close today over 232.00 might bring in some technical buying. Long funds have freed up some cash recently and might look to come back if things stabilize. Technically we’ve had a nice shakeout of weaker longs.

We have some fresh Colombians in recently and we’ll have a fresh FTO Honduras arriving soon. How can we be of help today?

All the best,
The Armenia Team