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7-10-2023 Armenia Coffee Report

Happy Monday to all, 

We’re getting rain here like we haven’t seen in a while.  Lots of water all at once.  Not good.  Very humid again this morning.  Time to switch to summer cold brew.  We got a Yirga Natural sample last week that would be perfect. 

An interesting week that was saw selling continue, for the most part.  One of the indicators we favor is the 9 day RSI and that got into oversold territory last week under 30.  It’s hovering around 30 now but it just tells us that this selling shouldn’t continue. 

As we expected, the COT issued Friday for trading as of Monday July 3rd (because Tuesday July 4th was a holiday), showed the long fund selling 3172 lots to stand at 21,052 and short fund sold 3413 lots to stand at a large 31575.  This isn’t counting any additional selling done during the week, and we believe there was some that will show on next week’s report.  Index funds were back and sold an additional 1000 lots as well.  Trade was the best buyer.   

ICE stocks were down again, but the pace of withdrawal has slowed to a crawl.  Total 545,050 with 3,034 bags pending grading.  There have been a total of 706 notices issued against the July C. 

Registered coffee production in Colombia, the world’s largest producer of mild washed Arabica, rose 1% in June from 951,000 60-kg bags in 2022 to 956,000 bags in the same month of 2023, reports the National Federation of Coffee Growers (FNC). 

However, in the last 12 months, it fell 13% from 12.3 million bags to 10.7 million as a result of climate variables that affect coffee production, which were not favorable for the flowering and fruit filling processes in the country’s coffee regions. 

From July 2022 to June 2023, coffee exports reached 10.5 million bags, down 16% from the volume seen a year earlier. 

We don’t believe the funds have the ability to keep selling the market at the pace they have been and will struggle to find sellers once they move to buy their new short position back.  We’re expecting a move that will go to at least 17200 but will require the funds to turn from sellers to buyers to get there. 

How can we be of help today. 

All the best, 

The Armenia Team