Good morning and happy Tuesday to you.
It’s a crisp Tuesday morning here in the Northeast. Hope you had a meaningful Memorial Day weekend.
It was blast off for the coffee market last week with just about every day higher than the previous. That continues into today. It was fueled by fund buying yet again, but also a lack of overhanging source selling. Let’s look at the COT from Friday which reflects trading as of Tuesday May 25th shows long fund increased their very long position to 59357 lots up 1654 lots. Short fund added a very small 106 lots to stand at 17579 short.
The market is gaining momentum from the known “ills” it currently suffers, which include a poor expectation for the coming Brazil crop, shipping difficulties around the word, and Colombian internal strife which have effectively closed down the country nearly completely, and even when coffee ships, congestion around the world slows transshipments and delays arrivals.
The 9 period RSI stands at over 70 (74.04 as we’re writing this) – overbought it’s been as high as 80.19 this morning. The market needs a bit of a correction here to quiet the overbought, something it can do by just treading water a few days. There’s good underlying support to the market and we’ve watched as the market has gone away from the roasters in a big way. Roasters were good buyers at the April lows, but have not chased the market higher and the COT shows them way behind at this point, and since then the market has moved 40 cents against them under that large spec interest.
Stocks in all hands at the ICE stood at the highest level this year, 2,075.788 as of Friday. 1,139,242 of that is Brazils. There are 128,252 pending grading.
We expect we haven’t seen the highs yet, maybe we’re still far from them, but we need a correction of the overbought, or so the charts tell us.
We have some nice RFA Brazils and Sidamo 4’s afloat. We have a few bags of FTO Guat that’s finally arrived, waiting on the warehouse now. We have a really nice RFA/Organic Honduras in the warehouse now.
Please let us know how we can help you today.
All the best,
The Armenia Team
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