It’s a wet Monday here, a little like spring the temperatures are warming a bit and it’s raining, helping to melt some of the snow pack. We’re drinking 100% Colombian today, Juan Valdez’s favorite!
The market stormed higher on fund based buying throughout the week. Fueled by fresh reports from Brazil that damage from lack of rain not only has damaged the next crop’s potential, but some are now saying the crop after that as well, citing poor vegetative growth in addition to irregular maturation of the coffee already on the trees. We’ve been saying the market would be stuck inside the range until it wasn’t, and now it’s not, but it took this kind of fund buying to make it so.
The disaggregated COT was issued on Friday for trading as of Tuesday Feb 23rd . After not doing much for the previous 3 weeks, fund longs bought 6998 lots to go to 47297 lots long and fund shorts bought back 6166 lots to end the period 14321 lots short, thereby buying a total of 13,164 lots. That’s a lot of lots and a heck of a way to come back to trading coffee. The majority of the sales were trade as origin took advantage of the break out to get some more coffee sold.
The momentum number which shows further potential were brought down after some consolidation on Wednesday and Friday, so there’s still some room to the upside in the near term. The May contract was as high as the 150’s in Dec 2019 and we could see it back there soon if funds continue this level of commitment to the long side.
ICE warehouse stocks continued their rise on the back of Brazil the total now 1,771,916 bags of which 778,187 bags are Brazils. There are still 81,093 bags to grade.
It’s still very hard getting containers out of Indonesia unless you’re willing to pay about 3x the usual rate.
We have some RFA Colombians arriving on March 4th. Please check the offer list that accompanies this report and let a trader know what coffees might be of interest to you!
All the best,
The Armenia Team