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
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
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
Everyday I send out a #certifiedstocks #report to my free and premium subscribers because it is one of the most relevant and useful benchmarks for the #coffee industry to “calibrate” to. Yet one of most common questions that we receive is for clarification on the #certstocks. “Why should we care about the certified stocks?” To be fair, there are several important and not well understood facets to this report. In this article we will outline what this report shows and how to
#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
#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.
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
#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.
As part 2 of our series on #TechnicalAnalysis, today we discuss one of the most useful and popular technical indicators for #commodity and coffee trading: the Moving Average Convergence Divergence (MACD). In this article, we will discuss how this indicator is constructed, how we can trade with it and what the limitations are, all while using examples from our favorite coffee futures "C" market (KC). If you are interested in learning more about technical analysis, this indicat
The #Robusta spec position hit an all time high of 43% of OI and #Brazilian #farmers are reportedly holding back sales, referring to $2/lb as "low prices". I recognize the #bullish #fundamentals as much as anyone, however, I think the conversation has become a bit one-sided and so I think it is fair to consider the #bear's angle. Now with any good debate, you should start by acknowledging the strength of the opposing position. In this article, I will start with the bullish
After last month's surprise GCA stocks report, many of us in the #coffee industry were watching closely this week's report, because the implications on price could be huge. What we saw was on the surface a relatively ho-hum number, but I would contend it was actually fairly #bearish. In the article that follows I explain how I interpret this report generally, and why this week's report was bearish for price. To explain the GCA stocks number from Friday, we will first look at
Ladies and gentlemen, the Coffee Trading Academy Podcast podcast is launched! Today we have a particularly timely episode with a focus on #CoffeeWeather (#Brazil and more). We kick off our first episode with a fantastic guest, the one and only David Streit, COO and founding member of #Commodity #Weather Group. David has been a commodity meteorologist for 40 years, in this wide ranging interview we cover the specifics of what's happening right now in the key coffee origins, b
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
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
(Edit: An earlier version of this article erroneously quoted the MiFiD position limits rather than the ICE Eur Delivery Limits. This has been corrected.) Those of you following the #Robusta #market have seen why this #commodity has the nickname "GoBusta". Since Jun 21st the U/X #calendarspread this market has gone from full carry at -22 to a $24 #inversion as of 11:18am this morning. This likely reflects a "squeeze" in the market exacerbated by firm connie #diffs, #season
We have a fundamental disconnect between #CertStocks which are approaching the 5 year highs and #GCAstocks which are flirting with their 5 year lows. If the GCA stocks win out, then we are looking at a rather bullish market, if Certs win out then we are looking at a #bearish market. As someone who believes in #commodity #fundamentals, it is a basic premise that price is determined by the intersection of #SupplyAndDemand and stocks are #Supply in the present. #Demand we can
The #CPI numbers came out and they were high, even higher than expected. The numbers for May were an increase of 0.6% which was 50% higher than the expectation of 0.4%. Why should we in the #coffee world care? Inflation is intimately linked with #commodity prices. As I teach in my course, when #inflation rises, commodity prices rise, and that includes coffee. Consumer Price Index (CPI) So is this latest CPI number really a concern? #Forbes warned us yesterday to get ready
#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
"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.
I have often remarked on the inverse correlation between price and #commodity inventory (stocks). In #coffeemarket the two most relevant stocks are the #GCA stocks (= USA unroasted #coffee) and the #certifiedstocks (tenderable to the exchange). As you can see from the graphic below, in some cases you can basically just invert the certified inventory to see a very basic price model (lower inventory = higher prices). However, while Certified stocks were rapidly increasing from