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7-3-2023 Armenia Coffee Report

Happy Monday to all,

This week is a little strange with the July 4th holiday on Tuesday and most firms closed on that
day. Many folks elected to take a “vacation” day today and the roads were consequently empty this morning. This holiday, that celebrates the founding of this great country, is one of our favorites. Lifting a Colombian cold brew to the good ole USA. Please, pass me a hot dog when they are ready.

Incredible 2 weeks of trading here on the coffee market. How do you get the market to go from 190 to 160 in 2 weeks? 17,000+ lots of spec selling that’s how, most likely closer to 20,000+. There is a sense here that inflation is cooling and that prices will head to more “normal” levels and coffee was one of the commodities that felt the punch of that macro hit. It wasn’t the dollar this time as the Brazil Real and the Colombian Peso were about unchanged for the week, currently standing at 4.78631 and 4170.8 respectively.

Again we see the fault of the COT which is issued on Friday June 30th for trading as of Tuesday June 27th, missing a lot of trading Wednesday to Friday we’ll only see in next weeks report. It showed long funds sold 6600 lots and now stand at 24,224 lots long. Short funds also sold, 8030 lots to stand at 28,163 short. Specs are now net short for the first time in some time. In addition, a sector we don’t usually see trading heavily, “Index traders” sold 3500 lots, reflection of this inflation outlook we talked about above. What is certain is the numbers are bigger considering the trading at the end of the week but we’ll only have a sense of that on Friday.

ICE warehouse stocks stand at 544,915 bags and the pace of drawdown has really slowed. There is currently 3989 bags pending grading.

So far, there have been 654 notices issued against July C.

A reminder we are officially in the Brazilian winter time. So far the forecasts show no signs of cold, in fact the weather has been fairly nice most recently. Just a reminder to keep you eyes on that area.

This should be a fairly interesting week. The start of which we note the volumes on the C are smaller and we’d expect that to continue as folks enjoy their summer holiday. Technically we’d expect some support here in the 160 area. Market is close to oversold on a RSI basis and a bit of a correction could take us back above 170 where the market would take a breath and re-assess. We’ve established quite a few new shorts, it’s going to be interesting to watch them get out.

How can we be of help today?

All the best,
The Armenia Team