Despite low certified inventory levels and a persistent inversion, the #coffeemarket has maintained a bearish trend and now even broken key support of the downtrend. From a chart's perspective, the bull market is over. The 200c level, a 1-year support reference, is long gone now. KC is currently in the 180c, which is a 14-month low. To be clear, this is the weakest chart coffee has printed since it has established itself above the 200c range a year ago. [Don't you just love
The Brazilian presidential elections are happening and the question that arises for us is: how does this affect the #coffeemarket? In this article, we offer you a perspective on what to expect from Brazil’s political economic scenario. We outline the present situation, provide an outlook on what can potentially happen from now and how various developments might affect coffee prices and markets in general. Background For those unfamiliar, Brazil uses a 2-round voting system.
On Sep 1st, 2022 we spoke with Adilson Machado, the manager of Cocapec, one Brazil’s premier Coffee Coops. Adilson himself is deeply experienced in the coffee business (been with Cocapec for 13 years) and he brings a wealth of knowledge and practical expertise to his position. In the sections that follow, we cover some highlights from the interview. Adilson provided us his view on the Brazilian coffee market, expectations for weather, demand, the influence of macroeconomics,
#Coffee has confounded both bulls and bears with a sideways movement after one of the most dramatic bull markets in a generation. Since the initial rally 260c, certified inventory has fallen to 23-year lows and calendar spreads have inverted to levels not seen since the Brazil frosts of the 1990s. So where is coffee headed to from here? My view is that coffee probably has one more rally left in her, but then she is done, and the bear market will start. However, price predict
The #coffeemarket is in a very different dynamic than it was 3 months ago, and we are getting near to a new paradigm: the bear market. In this article I will outline some of the warning signs that we are entering a bear market in #coffee and highlight some key data points to watch. I’ll also highlight 2 key areas that can change the #coffeefuturesmarket and return coffee to new highs. Still Some Life in this old Bull While it is time to look out for the bear market, we canno
#Coffee prices have crossed the 200 day SMA 4 out of the last 5 trading sessions, and last week marks the first time that this key support has been breached since the start of the current bull-market in 2020. Whatever the future may bring, the frost rally did its job and rallied prices from the 140s to the 260s, but now it is time to declare the frost rally over and done with. The market now needs to look to the future, and our assessment of the future will determine where pr
Today Fed Chairman Powell gave testimony before the US Senate where he cautioned on the economic impact of the #Omicron Variant on the US economy. This follows on the heels of the World Health Organization’s announcement on Friday that the new variant was a “cause for concern”. In this article, we discuss what the omicron variant is and what we can expect the impact to be on the macroeconomic environment and the coffee market. Background The omicron variant of the novel #co
4 days in a row now #CoffeeMarket has tried and failed to break the psychologically significant 200 level. Back in 2014 #coffeefutures crossed $2 dozens of times before finally collapsing and ushering in a 1 year bear market which despite a reprieve in 2016 then continued into 2019. As a twitter friend said "No two patterns are alike, but they're unfolding very similar[ly]." Let's be real: with the worst #frost in a generation, a #drought, and dry forecast for next 4 weeks,
Yesterday the #BrazilianCentral Bank announced a rate increase of 1% to combat the rising #inflation. This is the largest increase since 2003 and is often seen as a sign of coming appreciation in the #BRL and combined with the some indications of weakness in the #USD could be a portent of strength in the #coffeemarket. Let's break that down. In the sections that follow, I show a) some background on why these #currencies are relevant to the #coffee market and b) how I think
I read the Federal Reserve minutes so you don't have to! Steady as she goes from the #FederalReserve. This may disappoint #USD bulls who were expecting some fireworks or change in policy. As those of us who follow coffee know, a bullish USD is bearish commodities and so the recent rally in the #Dollar has weighed on #coffee prices. If that bullishness was misguided then we could see #commodities and the #coffeemarket pick back up. The core themes of the report were that #i
Another big day in the #CoffeeMarkets this time spurred by two pieces of news: 1) Brazilian gov't is issuing water advisories in several states including Parana, Sao Paolo and Minas which is a huge portion of the global supply of #coffee. 2) A warehouse shutting down in SP, Brazil due to #Covid. The best and strongest #bullmarkets are when the #Fundamentals, #Technicals, #Positioning, #Seasonality, #Weather and #Macro all align and it is time to consider that that is what is
The back month calendar spreads are firm. U22/Z22 is backwardated as of this writing and H22/K22, K22/N22, N22/U22, are all > -1 and flirting with inversion as well. However, the driver here is a bit opaque. We often hear in #coffeemarket that Calendar Spreads are one of the purest manifestations of fundamentals. The logic being that the long and short nature of the spread removes a lot of the noise from the macro picture (see correlation with #BCOM, #USD and #BRL). Moreo
We have been talking about the "macro" trade recently with the entire #commoditymarket getting a boost from the weak #USdollar and fundamentals in the #Ags. Today the #markets are taking a bit of a breather and #coffeemarket is no exception. The #BRL firmed hard though, ~2% on the day and this is supportive for #Coffee. With KC closing above that 145 resistance level (which is technically significant) and BRL doing a lot of its move after KC's close, Coffee is in a very stron
Those of us following the #coffeemarket, know that there was heat damage that caused flowers to abort from the #coffee trees in #Brazil, the world's largest producer of #Arabica. But what does that actually mean for coffee prices?
First, we are talking about permanent damage to the crop. If flowers abort, then no amount of rain after that period will make new beans, so we are talking about a hit to production on top of an already down year on Brazil's biennial production c