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4-3-2023 Armenia Coffee Report

Good morning and happy Monday to all,

It was an interesting week as we started at the highs for the week, and then steadily marched to the lows by Friday, most likely driven by spec selling into scale down roaster buying.

The macro is still playing a large part in at least the motivations of traders. Expectations of continued inflation and now central banks might have a harder time raising interest rates into troubles at banks both in the USA and Europe is a conundrum for the big minds to handle.

This morning reports that OPEC+ will drastically cut oil production has oil prices soaring, certainly won’t help the inflation narrative. WTI hits the highest prices since January.

The Brazilian Real has been very strong up to 5.05215 won’t help Brazilian sellers even into the rally today. Colombian Peso also has been strong at 4665.1. Word from Colombia that perhaps some of the selling pressure is off there as we transition from the main crop to the Mitaca with better sales recently reported. Brazil is also waiting on their new crop now though sales have been made and much of the coffee is already spoken for at least for this crop. We haven’t seen the usual pre-crop aggressive offers we usually see.

Commitments of traders for Tuesday Mar 28 released on Friday Mar 31 showed long funds sold 2623 lots to be 22,679 lots long while short funds bought 1222 lots to be 20,058 lots short. Offset was mostly trade as index and non-reportable we’re just about unchanged. We believe funds were additional sellers the last few days of the week, and they’re probably being stopped out into today’s rally.

We’re still dedicated to the belief that the market is bracketed by 170/185(maybe 190) until it isn’t, and we’d be buyers at the lower end and sellers at the higher end until it no longer works.

This week is filled with religious holidays. Passover is Wednesday night into Thursday. Good Friday is a market holiday and most warehouses, our offices and ICE Coffee are closed. And we’re still in the midst of Ramadan. Needless to say, with those 2 holidays mid and end of the week, it’s going to be hard to move coffee without early plans. Please keep it in mind. And if you honor any of these, we wish you peace during this time.

If we can be of help, please let us know.

All the best,
The Armenia Team