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8-16-2021 Armenia Coffee Report

Good Monday morning to all,

It’s a pleasant summer morning here, a little haze, not too hot. We have a nice bright Honduras this morning, very tasty.

Since the market collapse on the last trading day of July, the market has spent all of August so far trying to retrace some of those losses in small steps. Roaster buying with mixed sellers.

The market is trying to access the amount of damage done during the 3 days of cold weather in the coffee areas. We’ve heard numbers as low as about 3 million bags many at 5 or so and some as high as 8 million bags, so it’s a fairly wide spread of guesses, and that’s the best they are right now. What is of equal concern is will the market turn to seasonal rains as we get closer to October. Good seasonal rains might mitigate some of the losses if the trees can heal themselves. That can only happen with regular watering. We are currently experiencing the affect that poor rains can do, that’s why this current crop is not what it could have been, to have a 2nd year of that, tossed with a side of what damage the frost may have done and we have the potential for a very tight 2 years of coffee.

That’s underpinned the market some here. As has roaster based buying, as we’ve said before they are a bit behind. Lets look at the disaggregated COT issued on Friday August 13 for trading as of Tuesday August 10th. It showed fund longs again sold, this time 2582 lots are 49,132 long. Shorts sold 3199 and are now 15,480 lots short. Net/net trade sold about 3000 lots. Buyers were swap dealers (also likely trade) and “other reportables”.

Stocks on the C stand at 2,161,046 as of Friday with 1,145,541 of those Brazils of which 843,864 are in Antwerp. There are 12,521 bags pending grading, this number is down quite a bit from the running highs.

The Brazil Real is out again to 5.25171 but this time that hasn’t encouraged more aggressive offers, producers seem hesitant to offer until they have a better fix on the future. Colombia Peso is at 3840.5 today and here too, not many aggressive offers in the interior.

It’s still ridiculously hard to ship from Indonesia and Vietnam. We had hoped that things would start to show better by now but quite the contrary it’s only getting worse. We have a fair amount of experience on the desk here and none of us remember anything like this.

The market has been on the threshold of watching the averages we watch cross to the downside for some time but have been resistant to doing so, though it just seems like a matter of time. We’d view a leg lower as a buying opportunity. First notice day in September is one week from today, Monday August 23rd.

We have a nice FTO Colombia that’s associated with a women’s managed coop that just came in. We have some Sumatra Mandheling FTO similarly associated with a women’s managed coop that’s also known for producing some great coffees, those arrive mid-September.

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All the best,
The Armenia Team