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3-28-2022 Armenia Coffee Report

Good day,

It’s a chilly morning here in the Northeast, we even had a few snow flurries yesterday. Good coffee drinking weather and we have a nice Colombian today.

It was a tough end to what started out as an up week last week. We thought the long fund might be nearing the end of their selling program, but not yet, at least according to the commitment of traders report issued Friday. This was in spite of a strong Brazilian Real, that finally went strong under 5.00, (this morning it’s at 4.77876 as we write this). A strong local currency and lower C market will not be helpful to Brazilian farmers.

On the chart the weak close and follow through this morning has us concerned the market will try important support in the 200 day moving average, this morning just above 210.00. The market needs a move back over 224.00 to stop the momentum, seems like a tall order right now.

The Commitment of traders report issued on Friday Mar 25 for trading as of Tuesday Mar 22 showed long funds selling another 5342 lots. Short funds bought 1961 lots and were likely the early week buyers. Trade was the buyer again. ICE stocks went up again this week now 1,142,629, as “big” as they have been in some time, with just 11,520 pending now.

Fundamentally nothing has changed, in fact some things have become more bullish, in our
eyes. Interest rates here in the USA and around the world are heading higher as central banks try to fight inflation. It’s still just as hard as ever to accomplish any logistical task, from getting containers and vessel space at a fair price at origin, to arranging trucks to pick up coffee from the pier or from the warehouse. We have customers asking us for quotes on physicals in the latter part of the year, and no firm commitments from SS companies in that time frame. As our current shipping pacts expire, steamship companies are showing no desire to re-commit to new ones. We’ve heard for over a year and a half that things should be better 6 months from now. And yet, here we are hoping 6 months from now, things are better. Into the falling market diffs continue to work higher where origin is still offering.

As a company with over 65 years of experience as an importer, we can say without hesitation, it’s as hard to do our job as it’s ever been.

On a positive note, drinking 2-3 cups of coffee a day may cut the risk of heart failure by 15 per cent. So says a study by the University of Melbourne write. They add “Coffee should be included as part of a healthy diet”. We’d still like to help if we can, you just need to tell us how.

All the best,
The Armenia Team