Good morning and happy Monday,
It’s a glorious Spring morning here in the Northeast, the kind you always hear about. Sitting here writing this and listening to the crew mowing the lawn out front drinking hot Colombia Excelso. Life, as they say, is good.
More trading inside the range, for the most part with little trading of note. By the end of the week the market made a play to try the upper side of the range but could not mount the quantity of buying to overcome origin selling that flocks to the market up there. Macros have been relatively neutral.
COT issued on Friday May 19 for trading as of Tuesday showed the smallest changes we’ve seen in a while. Long fund bought 414 lots and now stand at 32,732 lots long. Short fund bought 560 lots and stand at 19,854 lots short. Trade sold 1490 lots net/net.
Brazilian Real is a little weaker at 4.98030 this morning and the Colombian Peso is about unchanged from last week at 4540.0 as we’re writing this.
ICE warehouse stocks were down again on the week, though not substantially so and stand at 629,810 bags in total. In the end there were 667 notices posted against the May contract.
Brazil should harvest over 54.7 million bags of coffee in 2023. According to the National Supply Company (Conab), this is an increase of 7.5% compared to last year and 14% compared to 2021. The expectation for Arabica coffee, the most popular type, is that almost 38 million bags will be harvested, representing 70% of the country’s coffee production.
Conilon coffee, on the other hand, should have a production of 17 million bags, a 7.6% reduction when compared to last year’s harvest. Even with the expected increase in the harvest in Rondônia, Bahia and Mato Grosso it will not be enough to compensate the losses in Espírito Santo.
According to Conab’s Crop Monitoring Manager, Fabiano Vasconcellos, production recovered this year with improved weather conditions in 2022, after a difficult year in 2021.
There just doesn’t seem to be enough buying to keep the market above important levels that might trigger a change in the way the market has been behaving recently. With long funds already long over 32,000 lots that’s probably going to mean we need to consolidate a bit before we’re able to move much higher. The news above about Brazil should mean things remain tight through this coming crop and will continue to add to the volatility in the market. We’d love to be of help if we can be.
All the best,
The Armenia Team