Good morning to all. Hoping our message finds you well.
Very interesting action in the market last week. We wrote in our message last week that a sustained rally would require sustained fund buying. Well, the COT issued on Friday for trading as of Tuesday April showed just that. Long funds bought 3883 lots and are now 41995 lots long while short funds covered 4156 lots and now stand 23927 lots short. We expect that the trading Wed-Friday, and this morning, is more of the same. Origin only sold about half of that volume as origins are simply not as aggressive this time at these levels. First notice day was interesting as we saw over 800 lots issued and stopped, most of them Brazils in Europe. These are likely new tenders, and the stopper is probably happy to have them.
Brazil Real starts the week as strongly as we have seen in a bit at 5.4586 while the Colombian Peso stands at 3628.4. Actual coffee saw its best interest in some time with roaster interest picking up across the board. Here in the USA as more folks return to their daily routines and businesses and schools continue to open, we are seeing more demand for coffee across the spectrum. Not everything is easy to come by and shipping is getting harder and harder. Containers in Indonesia, and to a lesser extent Vietnam, are very hard to come by and costs to ship have at least doubled if not tripled. Exporters in Brazil and Colombia are complaining about container availability.
Technically the market is in “go mode”, bullish here after a strong buy signal was issued on Thursday with an outside day higher. We’ve broken and so far, held above 14000 this morning, something that was hard to do on Friday owing to some origin selling. The only caution flag we see here is an RSI that’s now at 68.29 – 70.00 and higher is considered “overbought”, though we’ve certainly seen the coffee market trade into the 90’s in RSI when things are rip roaring bull market mode. In July the Jan high of 14220 is in sight and then the 2020 highs in the 150’s could be next. With demand increasing and supply having nothing but problems, we think we could be testing that 15000 level before long, though a little correction would be helpful in the long run.
Our Brazil Mogiana 2/3 scr 17/18 are now in Continental, as are some really nice Colombia RFA. We have some very nice RFA/Organic Honduras that is also freshly into Continental and we have some RFA Honduras arrived over the weekend that has to be stripped yet. There are some very nice Yirga grade 1 in the warehouse now, along with some Supremo and Excelso Colombia. Please let us know if we can be of help!
All the best,
The Armenia Team