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7-5-2022 Armenia Coffee Report

Happy 5th of July.

This weekend we celebrated the founding of this great nation 246 years ago. Hope you had a wonderful time with family and friends, as we did.

Another week where it seemed like the coffee market was sponsored by volatility.com or something like that. We started the week testing lows just above 217.00, well under the 200 day moving average and looking very weak. On Wednesday, we had another day where it seemed the market just ran out of selling and we tested and quickly rallied back above the 200 day MA and those stops gave us another big plus day closing at 228.25 after once again testing 230.00. By Friday, the market rallied up to 236.00 early in the session on light volume but couldn’t hold those levels and by the end of the day, we had fallen back to a 224.65 close and again today we down to 221.00, almost back to where we started last week. Lows to highs to lows we gone from 217.10 to 236.05 and now back to 220.85 as we write this morning.

Some of the volatility can be traced to ICE stocks and the continued rumor that big draw downs are coming. In fact, we’ve seen two days of drawdowns of 30,000+ days to close out the week last week and stocks were down to 854,584 by Friday the lowest we seen in some time. There are only 9920 bags pending grading.

Costa Rica said their exports fell in June by 11.8 percent on limited availability. Exports were 146,581 bags as compared to 166,222 last year. Honduras also reported lower shipments for June down 16.3 percent which IHCAFE attributed to the rust fungus reducing the overall crop size.

On Thursday, an earthquake of 4.1 hit Colombia, and was felt in the coffee producing areas. Damage was reported as minimal and the reports we saw said there were no fatalities.

The COT issued on Friday for trading as of Tuesday June 28 showed long funds selling 3460 lots to stand at 40,401 lots long. Short funds were also sellers of 1373 lots to stand 6616 lots short. Remember this is as of Tuesday and shows it was fund selling that gave us the lows of the week. Buyers were trade of almost 9000 lots giving roasters a good chance to restock.

As we cross into July, we’re officially into frost season in Brazil. Right now, the weather is fine in the forecast, but we’ll have to remember to keep an eye out for forecasts that might indicate colder weather approaching.
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All the best,
The Armenia Team