Good morning,
It’s a chilly, rainy Monday morning here. Perfect morning for a nice Sumatra Mandheling hot. Helps get the blood flowing.
Correction was the name of the game this last week as selling seemed to let up a bit and gave the market a chance to recover some recent losses. Options expiry on Friday for May options was orderly and mostly quiet, not as active as the serials before it.
As we expected, the COT issued on Friday April 9 for trading as of April 6 showed long funds sold 2480 lots to stand at 36920 while short funds sold 2878 lots to stand at 33999 lots. While the net/net number is as close as it’s been, watching each side play out will bring swings to the market in good size with both over 30,000 lots. For the week, the Brazilian Real didn’t do much trading in a range from 5.55 to 5.65 or so.
It’s been notable that the market has struggled even so, every time it has come above 12800 and this morning has been no exception. We see a fair amount of selling from origin here and the roasters who have been the other side of all this fund selling lately, are not inclined to chase the market higher. A sustained rally from these levels is going to require
fund support.
ICE warehouse stocks stand at 1,857,303 bags this morning of which 900,249 are from Brazil. The vast majority of those (857,090) are in Antwerp and Hamburg-Bremen. There are 46,076 bags pending grading.
On physicals, offers narrowed from both Brazil and Colombia last week. It’s still very difficult to ship coffee from Asia owing to a lack of container availability and soaring freight rates. In Vietnam rates have doubled (at least) and in Indonesia they’ve tripled.
In Guatemala, the Pacaya volcano erupted spewing lava that did damage some nearby coffee farms.
A report from Fitch Solutions stated “We forecast global coffee consumption to increase over our forecast period from an estimated 161.2mn 60kg bags in 2020 to 175.0mn 60kg bags by 2025. Following 2.3% y-o-y decline in global coffee consumption in 2020 as a result of the
Covid-19 pandemic, we expect growth to average 1.7% y-o-y from 2021-2025. This growth will be at a slower rate than the five years leading up to 2020, which averaged 3.0% y-o-y from 2015 to 2019, largely the result of decelerating growth in most developed markets (DMs), with consumption levels in some (Japan) having started to decline.”
Fresh arrivals include RFA Colombia EP in Continental, FTO Honduras (arr 4/12), RFA Honduras (arr 4/22), RFA/Organic Honduras (also 4/12), Brazil Mogiana 2/3 Scr 17/18 are in, not yet stripped, and Vietnam W/P Robusta on 4/13
If there is something we can help with, please let us know
All the best,
The Armenia Team