Good day,
Finally getting a nice soaking rain here in the northeast, though some are getting too much and the flood watches and warnings are all around us. No moderation this year we either get soaked, or nothing at all. We hope you had a nice Labor Day. Here in the northeast, it’s usually time now for the kids to go back to school, where’s that big mug of hot delicious coffee?!
Another interesting week last week. After the strong, quick move higher the previous week, the last week was a slow corrective move. Perhaps driven by the Labor Day holiday and the lack of players and volumes, the market just make a flag formation lower.
The dollar was strong against the Colombian peso but not as much against the Brazilian Real though both have switched this morning. The COP which had been close to 4500 end of last week is at 4458.5 this morning and the BRL which had come in as close as 5.00 is trading at 5.1965 this morning.
Rains came better in Brazil and if it continues, it might induce a flowering where it is needed.
In Colombia production reached 949,000 60k bags compared to 915,000 in August 2021. Jan-Aug though production is still down 7.3 million bags compared to 7.8 in 2021. For the 12 month period Colombia production dropped by 9% to 12.1 million bags compared to 13.2. Exports are 4% lower.
Commitment of traders report was revelatory. Long funds added 11,451 lots to 49,590 lots long while short funds bought 721 lots. Trade sold 10,032 lots.
As of Friday ICE stocks stood at 635,196 bags with 56,048 bags pending grading. Even though they’ve been certifying quite a bit of coffee, there have also been some good draw down days.
Close to 225.00 remains the 200 day moving average. We would expect some of the more recent longs to exit on a break of that level. With last weeks corrective action, the market has pulled back on the 9 day RSI back in the mid-fifties which is good if the market wants to work higher. So far this morning, market looks like it has a little 3 day weekend to rub out of it’s eyes, it seems lethargic and that usually means it will try lower support.
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All the best,
The Armenia Team