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The Unexpected End of the Coffee Market Certs Crisis

Jan 5
4 min

The Unexpected End of the Coffee Market Certs Crisis

This year we saw the #coffeemarket ICE-NY certified inventory reach the lowest level in over 20+ years and with prices well above tenderable parity for the foreseeable future, it looked like there was no end in sight. Yet, over the last two months we have seen the certified inventory more than double from well under 400 thousand bags to over 800 thousand, with another 227k bags awaiting grading. How did this happen when Brazilian semi-washed, the cheapest tenderable coffee,

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Coffee Supply and Demand Made Easy

Nov 8, 2022
7 min

Coffee Supply and Demand Made Easy

Understanding the #SupplyandDemand (S&D) balance sheet is essential for any professional #trader, but can also be extremely daunting. For many #coffee and #commodity #traders and #analysts, we have a deep insecurity in our relationship to the fundamentals because of its complexity and the extent of the many unknowns. Despite (or perhaps because of) the difficulty of mastering the #SnD, it is a prized skill in our profession and a key driver to price discovery in the #coffeem

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Technicals Suggest Coffee Bull Market is Over

Oct 27, 2022
4 min

Technicals Suggest Coffee Bull Market is Over

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

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What the Heck is going on in Coffee?

Oct 20, 2022
5 min

What the Heck is going on in Coffee?

Today #coffeefutures traded below 190c for the first time since July 2021. Despite #coffee prices hitting a high in the 260s back in Feb and then trading in the 200s for well over a year, looking at the chart it is quite clear that we are in a bear market and have been for at least 8 months. Despite the current bear market, #calendarspreads remain inverted, #certifiedinventory has made new lows and the most recent #Brazil crop was worse than many had expected. So what the h

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Objective Coffee Weather Analysis on a Global Scale

Oct 18, 2022
5 min

Objective Coffee Weather Analysis on a Global Scale

Since #Coffee is an agricultural product, the weather is an essential component in the #coffeemarket. The fact that we must rely on weather for a good crop means that volatility is a core feature of our market. It also means that there is an opportunity. With the proper analysis, monitoring the weather in coffee producing countries provides an important insight into future price movements. Those who received early warning of the severity of the 2021 frost received an importa

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How the Coffee Market Inversion can Break Itself

Oct 11, 2022
5 min

How the Coffee Market Inversion can Break Itself

One of the most striking features of the #coffeemarket in recent times is the high inversion of calendar spreads instigated by the record low certified #coffee stocks. However, we are now beginning to see the first signs of how this inversion could break, facilitated by the inversion itself. In this article, I will discuss in detail how the current fall in diffs is related to the gradual change in trade posture. I will also point out how this could be the first signs of a cha

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How the Brazilian Elections Affect the Coffee Market

Oct 6, 2022
7 min

How the Brazilian Elections Affect the Coffee Market

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.

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Cert Stock Horror Show-Case Study of 1996

Oct 4, 2022
5 min

Cert Stock Horror Show-Case Study of 1996

Halloween is coming this month, and in keeping with the spooky traditions of this month I want to share a number with all of my #coffee friends that should send a shiver down your spine. That number is 1.7. 1.7 is the amount of months until #certifiedstocks hit zero using the past month’s rate of drawdown. As always, I try to share a balanced view, and there are some rays of sunshine in this story, but I think that all of us in the #coffeemarket need to be aware of just what

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Invasion of the Certs

Aug 16, 2022
3 min

Invasion of the Certs

There are now an impressive 263k bags of #coffee pending grading in Antwerp, and this puts a different spin on the bullishness of the certified inventory. The previous narrative had been that the #coffeefutures market was decertifying coffee to consume, which had sent calendar spreads skyrocketing to 20+ year highs. However, the appearance of nearly 300k bags of pending stocks has challenged this narrative. In this brief note, I'll talk about why Certs matter, how the pendin

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Lay of the Land

Aug 9, 2022
6 min

Lay of the Land

#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

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Spreadpocalypse Now

Jul 7, 2022
8 min

Spreadpocalypse Now

Recently a #coffee researcher friend of mine and I were discussing one of the key topics driving the #coffeemarket today: the disastrous #certifiedinventory and its dramatic impact on #calendarspreads. In this article, I will discuss the current "spreadpocalypse" the #inverted calendar #structure in the market, why I think we may be in the worst of it right now, and how I anticipate this to play out over the coming months. If you are less confident in your #commodity futures

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Changing Landscape in the Coffee Market

May 25, 2022
8 min

Changing Landscape in the Coffee Market

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

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Understanding Physical Coffee Prices

May 10, 2022
5 min

Understanding Physical Coffee Prices

It is a well-worn cliché to those of us in the #coffeeindustry to compare coffees to wines but it helps us convey to the lay-person the variety and depth of the #coffeemarket rather succinctly. Much like in the analogy of wine, the array of origins, qualities and preparations in #coffee not only creates a variety of flavor profiles but also a variety of pricing and availability. The global coffee market captures this variability in pricing using a method shared with many oth

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The Frost Rally is Over—Whats Next?

May 3, 2022
6 min

The Frost Rally is Over—Whats Next?

#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

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Introduction to the Big 5 Essential Coffee Reports

Mar 17, 2022
4 min

Introduction to the Big 5 Essential Coffee Reports

There is a lot of information out there on the #coffee market and many people in the coffee industry and across the supply chain can find the reports and data confusing or overwhelming. In this short guide, I’ve put together short summaries of 5 of the most essential reports for coffee people to understand, along with links to short articles that provide more depth on these key #coffeemarket reports and how to interpret them. I’ll also conclude with some thoughts on interpre

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Russo-Ukraine Conflict and the Impact on Coffee (and Commodity) Markets

Feb 24, 2022
5 min

Russo-Ukraine Conflict and the Impact on Coffee (and Commodity) Markets

#Russia has begun aerial bombardment of #Ukraine, including in the capital city of Kiev this morning. What many had hoped (including me) would be a limited and bloodless territorial dispute is now looking like full-scale #war. As a military veteran of two wars, I do not speak lightly of the conflict, it will be devastating to those directly, and likely to seriously alter the global security dynamic that has existed since the end of WW2. However, my role is to offer insight

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Understanding the US Dollar Impact on the Coffee Market - Part 1

Feb 18, 2022
7 min

Understanding the US Dollar Impact on the Coffee Market - Part 1

#Coffee is both a financial product and a global #commodity. It is cultivated, consumed, shipped and traded across almost every country across the globe. Due to its global nature, the US #dollar performs an outsized role as a common #currency in the #trade of this product. Notably, the two primary #coffeefutures #markets (ICE Eur and ICE US), are priced in #USD. This makes understanding the purchasing power of the US dollar foundational to understanding the price of coffee.

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Breaking the Robusta Inversion

Feb 9, 2022
5 min

Breaking the Robusta Inversion

#Tradehouses have shipped at least 18,000 MT of #Robusta from #Indonesia and #Vietnam to #Europe in the month of January and there are more shipments on the way. These shipments are notable for 2 very specific reasons: 1) these were shipped “break bulk” ie without containers, 2) reports indicate that some (not all) undisclosed portion of these are intended to be certified. The net effect of this news is a collapse in the front month robusta #spreads. This is potentially a ga

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Technical Studies #3 - Moving Averages For Coffee Traders

Feb 4, 2022
6 min

Technical Studies #3 - Moving Averages For Coffee Traders

One of the most popular, important and “easy to use” #technical indicators is the Simple Moving Average (SMA). This simple indicator can be used to tell you several things about the #coffeemarket, however, it has one very important and primary purpose: a simple moving average allows traders to define and identify the trend. In this article, we will first cover why it is so popular, then we will define what the moving average is, what the logic is and how one can use it when

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Coffee Calendar Spreads are On Fire

Feb 1, 2022
7 min

Coffee Calendar Spreads are On Fire

Yesterday, #Arabica #certifiedstocks dropped an impressive 70k and the #calendarspreads are going bananas. Calendar spreads in Arabica #coffeemarket are notoriously boring (unlike #Robusta), and yet this year spreads have been ANYTHING BUT BORING. #Spec interest in the spreads has driven a lot of the #bullish #price action there but this has been instigated by some very real #fundamental concerns. In this article, we will look at what the calendar spreads are, why they refl

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