#commodities

top of page

modifiedbeans.jpeg.jpg

Coffee Trading Academy Blog

Search

Coffee Destination Stocks – A Guide

Jan 10
5 min

Coffee Destination Stocks – A Guide

In #Coffee, and in many #commodities like it, stocks (inventory levels) drive price. This is particularly true in coffee because the #demand for coffee is relatively #inelastic. This means that stocks are the volatile component of the #supply and #demand curve and therefore it is the portion of the #fundamentals that requires special attention and hard data. In this article, we are going to cover what #DestinationStocks are, what are the nuances of the 3 primary #greencoffe

568 views0 comments

What the Latest Inflation Number Means for Coffee (and all Commodity) Prices

Aug 11, 2022
3 min

What the Latest Inflation Number Means for Coffee (and all Commodity) Prices

The overall framework in commodities is that a weak USD rallies commodities and a strong US dollar devalues commodities. This is the basic influence that we in commodities need to understand, and we just recently had a bullish commodity event: the US inflation number. US inflation came in lower than expected and this was interpreted as being bearish the USD which is bullish for coffee and all commodities. In the paragraphs below, I explain why this is bullish for #coffee an

294 views0 comments

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

2,564 views0 comments

Understanding the US Dollar Impact on the Coffee Market – Part 2 – Predicting the USD

Apr 21, 2022
5 min

Understanding the US Dollar Impact on the Coffee Market – Part 2 – Predicting the USD

The #USD directly impacts the price of #coffee (and all #commodities): Dollar strength lowers the prices of commodities and coffee, and dollar weakness increases prices. We looked at this in detail in our last Macro article. Therefor predicting the value of the dollar is an essential component of predicting coffee prices. In this article, we will first outline our case that #monetarypolicy is the primary driver of USD prices, then we will go through how the Fed’s dual mandat

271 views0 comments

How to Read Coffee Weather

Dec 28, 2021
4 min

How to Read Coffee Weather

#Weather is one of the key reasons that agricultural #commodities are volatile, and in #coffee this is particularly acute. It is often remarked that Coffee is the second most actively traded #commodity after #energy (it's not true, its a myth), but Coffee is extremely popular among #speculators. One reason that coffee is so keenly desired by speculators is that the #biology of the coffee plant and the chaotic nature of weather systems combine to make a volatile mix. In thi

660 views0 comments

Technical Studies #1: Using the RSI for Coffee Trading

Dec 1, 2021
3 min

Technical Studies #1: Using the RSI for Coffee Trading

One of the most useful #TechnicalAnalysis indicators for #commodities in general, and the #coffeemarket in particular, is the Relative Strength Index (RSI). In this article, we will discuss what this indicator is, how it is constructed, and how it is interpreted when reviewing the #market. If you are interested in learning more about technical analysis, this indicator (along with many others) are taught in detail as part Day 3 of the Coffee Trader's Course. Why should you ca

402 views0 comments

7 Data Points to Watch in Coffee

Nov 11, 2021
3 min

7 Data Points to Watch in Coffee

#Coffee is a rapidly changing market and while conviction is essential, we need to be prepared to change our view when the facts change. Below are 7 data points to watch out for in coffee, when these become available, we should be prepared to change our minds. 1) GCA Stocks These are due out on the 15th, expectations are for a healthy draw down. The draw is expected seasonally and also from the wide annual deficit and logistical problems in shipment. Deviating from this exp

385 views0 comments

What to Expect When Your Expecting (a Fed Press Release) *Coffee Market Edition*

Sep 22, 2021
3 min

What to Expect When Your Expecting (a Fed Press Release) *Coffee Market Edition*

In just a few short hours, the #FOMC (230pm EST) will be making a statement and the markets will be reacting. For people in the #coffee industry (and #commodities), what you need to know is that the overt expectation is for a #bullish #dollar which is #bearish #coffeefutures and commodities. However, that expectation may be subverted. I go over how that can happen below. The overt expectation is bullish the USD and bearish for coffee and commodities The basic relationship

174 views0 comments

The Struggle for $2 Coffee, Comparison with 2014

Sep 2, 2021
3 min

The Struggle for $2 Coffee, Comparison with 2014

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,

362 views0 comments

Coffee Report Focus #2a: Everything You Ever Wanted to Know about the COT *but were afraid to ask

Aug 20, 2021
3 min

Coffee Report Focus #2a: Everything You Ever Wanted to Know about the COT *but were afraid to ask

In this second part of my series on essential reports for traders following the coffee market, we will look at the #COT. This report is a must for every #coffeemarket participant to follow because it provides crucial information for making price #forecasts. In the sections that follow, we will look at the 3 versions of the COT, How to read the COT and I will also share a key metric that I provide on my free report subscriptions (that isn't provided by most other distributor

1,476 views0 comments

Why Coffee Certs are Different Now, and NOT Bearish

Aug 19, 2021
3 min

Why Coffee Certs are Different Now, and NOT Bearish

One of the most important data points to follow in the #coffeemarket is the certified stocks. Every day, I send out my #Coffee #CertifiedStock reports to my subscribers (available for free here) and the reason that I do so is because this report is one of the most useful ways to estimate #fairvalue of #coffeefutures that we have. However, this relationship has changed dramatically in the last year and I want to show how we need to adjust our thinking on this report. Over the

412 views0 comments

A Macro Boon for Coffee

Aug 5, 2021
5 min

A Macro Boon for Coffee

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

400 views0 comments

Volatility and Inversion in the Calendar Spreads

Jul 27, 2021
3 min

Volatility and Inversion in the Calendar Spreads

The #Arabica #coffeemarket was inverted by 5 bps in N22/U22 as of 7:18am. This is VERY unusual. I'm not trying to be alarmist here, I just want to highlight that this is a unique time in the #coffee #markets. I will examine why this is unique below, but here is some context for those who are unfamiliar with market structure. Contango Market structure can be a bit daunting for those new to #commodities or coffee, but its one of the most essential concepts for #roasters, #me

622 views0 comments

The Pied Piper of Coffee

Jul 13, 2021
2 min

The Pied Piper of Coffee

Back in October 2020, the Pied Piper of the Brazil drought led away all of the bearish Rats from the #CoffeeMarket, and now he has returned to collect payment. Either the market has to deliver some bullish data from the current crop or all of our new-found bullish speculator friends are going to disappear with the Piper. For months we have been hearing about the drought in Brazil causing a massive shortage of coffee and indeed the market has rallied from 105c back in Novembe

181 views0 comments

FOMC Might be Bullish Coffee

Jul 8, 2021
3 min

FOMC Might be Bullish Coffee

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

65 views0 comments

The Doomsday and Mini-Doomsday Inflation Scenarios

Jun 20, 2021
3 min

The Doomsday and Mini-Doomsday Inflation Scenarios

The #FederalReserve's #FOMC met this past week, and the results are relevant to us in the #coffeemarket, and indeed all of the #commodities. There were two big takeaways from the communications last week that were somewhat contrary, but the market interpreted them as #bullish the #USdollar. I think that bullishness may be unwarranted in a small way (the mini-doomsday scenario) and also I want to highlight what the Big Risks are here (the doomsday scenario). First, I'll recou

168 views0 comments

Are Rate Hikes Coming? Does it Matter?

Jun 1, 2021
2 min

Are Rate Hikes Coming? Does it Matter?

#Currencies and #FX are notoriously difficult to predict because they do not exist in a vacuum, one #currency affects all others. That said, I'm cautious that #interestrate hikes are coming and that this will put some #bearish pressure on the #commodity #markets. As a #coffeemarket analyst, there's three factors here we need to consider: 1) will the #federalreserve raise interest rates? 2) will that appreciate the #USDollar? 3) will this put #bearish pressure on #commodities

130 views0 comments

#Inflation Trade Overdone?

May 24, 2021
1 min

#Inflation Trade Overdone?

Given the outsized influence of the #macro bullishness on the #coffeemarket, it is important to revisit this topic. What's concerning to me here is that the #USdollar has continued to weaken, but many of the #commodities have come off quite a bit. Some of this is due to #bearish fundamental news (rains in #wheat for example), but given the synchronized move into a macro #bullish stance, I'm very cautious of a synchronized unwind. In particular, it seems clear to me that the #

27 views0 comments

*The Commodities vs Coffee*

May 11, 2021
2 min

*The Commodities vs Coffee*

"When all you have is a hammer, all of your problems look like nails." As a "coffee guy" or "coffee gal", it can be very easy to get stuck in our worlds and lose sight of the big picture. For those of us who are immersed in #coffee market data and talk about the #coffeemarket on a daily basis, we tend to see everything in terms of coffee. When you publicly share a view of the #market, it is even more tempting to look at every day's price action as confirmation of our view.

37 views0 comments

bottom of page