Good morning,
Let’s start this week’s message with the famous words of one Emily Litella: “Nevermind”
Monday started the week off the high for the move and the highs for the week and it was literally all downhill from there. As the week went on, weather reporting started to mitigate the forecasts for the end of the week. Traders had a tough week as it meant getting up early on Thursday and Friday just to make sure but, both of those days turned out to be less than even some of the mitigated forecasts had envisioned. There was some frost noted on Thursday in much of the same areas as July 20th. Friday was a little saw similar and with that the bottom dropped out and we had a 23 cent range highs (just after the opening) to lows.
This morning forecaster Drew Lerner wrote “Frost occurred again Saturday morning in Sul de Minas, but the cold was not nearly as potent as that of Friday morning. Sunday temperatures warmed and there will be no further risks of frost or freezes in key coffee areas in Brazil for the next ten days.”
And so with the no risk for the next 10 days, this morning saw the market continue the correction down
to the low 170’s. With the weeks trading and into this morning, we’ve corrected the overbought, filled a
decent sized gap left on the way up, and tested the 21 day moving average for the first time since July 19th.
The disaggregated COT issued on Friday July 30th for trading as of Tuesday July 27th showed long funds sold 3973 lots to wind up 53,260 lots long while shorts bought 4588 lots to be short 13,477. Interesting trade longs bought 6228 lots and trade shorts also bought 1224 lots meaning trade bought about 7452 lots really surprised us, we expected spec to be buying and trade selling, but so it goes.
ICE warehouse stocks continued to drop slowly and methodically now 2,174,208 with Brazil 1,146,841 of which 843,864 are in Antwerp. There are 12,033 bags pending grading.
Market should be interesting from here. There are still problems in this market not the least of which are shipping/logistics are still very frustrating all around the coffee world, and supplies are tight because of it.
We will probably continue to get reports from the areas of Brazil affected by the frost over the last few days and it seems that there were a few areas in Brazil that were especially hard hit during these events.
That said we expect a bit more consolidation now the market made a quick run up and an even quicker run down (par for the course in coffee). We’ll watch to see if the market can fall below the 21-day average and a sign for some of the funds to lighten that big long up some.
We have some nice fresh arrivals, especially some really nice RFA certified coffees, Brazil 2/3, Colombia EP 10, Ethiopia Sidamo Gr 4, Guatemala SHB EP and Honduras SHG EP. We have some very nice FTO Colombia from a women’s centered coop in the warehouse and a FTO Sumatra from the Ketiera women’s centered coop in Indonesia arriving on the 19th.
If we can be of help, please let us know.
All the best,
The Armenia Team