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
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
Those of you who receiving my premium reports have seen me discussing the weather in #Brazil for some time now, and I wanted to open it up for public discussion. The fact of the matter is this: after enjoying an impressive recovery in rainfall in Sep and Oct, the last several weeks of rain has been rather disappointing. My (tldr) view is that even though the #precipitation has been abnormally bad, the current forecast suggests that the #crop will not be adversely affected---
#Coffeefutures have broken out of the 200-210 range, surpassed its post #frost high of highest 217.85, and even surpassed the highs of the 2014 #Brazil #drought. This puts the current bull #market as the highest #coffee prices in nearly a decade. How strong is this bull market, and where do we go from here?
From Brazil, Destination Stocks, to Chart, I break down some of the biggest drivers on price in the sections below. Brazil 22/23 Crop As per usual, the #coffeemarket de
#Weather is one of the inherent drivers in coffee market volatility and right now there are 3 developing stories that all #coffeetraders need to keep a sharp eye on. These are the persistent wetness in #Colombia, the wet harvest in #Vietnam and the sustaining of the wet season in #Brazil. In this article I will provide some background on evaluating weather in the #coffeemarket, outline what is happening in these three key origins and then make some #forecasts about what to ex
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
The #Brazil 22/23 #coffee crop has been through a lot this year already, but over the weekend we finally had some good news for the farmer: a healthy rainfall. There has been substantial damage to the crop already from the #frosts and the #drought so there is question here as to what the rains mean. My view is that the rains portend a strong recovery in the #Arabica crop and will bring in a lot of Brazilian selling to the #coffeemarket. Brazilian Rains Raining on Coffee Mark
#NOAA recently updated the forecast for #LaNiña to 70-80% chance for this season, depending on how this unfolds will determine the extent of the impact on the global #coffee #futuresmarket. The key point is that La Niña is often associated with cooler temps and dryness in #Brazil which could be a MAJOR problem for the #coffeemarket. In the paragraphs that follow, I will outline how the El Niño/La Niña phenomenon impacts coffee, what the #forecast shows and what we need to wa
Like yin and yang, the Law of #Supply and the of Law of #Demand are complementary economic truths: When prices are high, supply increases. When prices are low, demand increases. This is normally reflected in the #COT. When prices rise we see the commercial short position rise and the commercial long position fall. Yet today things don't look quite that way: despite terminal prices of nearly 200 cents/lb, the Commercial short position is barely above average. Let's look at
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,
For the past several weeks and months we have been hearing about #drought and #dryness in Brazil (from our friends like analysts Judy Ganes, Mike Nugent, the Analyst-Trader, and President of MJ Nugent Co. , and others). How dry is it, and is it a source of concern? My view is that it is not a strong concern now, but that there is potential for a bigger problem and I highlight what that is and why in the paragraphs that follow. Background: 21/22 is a significant #deficit yea
Today, the #coffeemarket (#Arabica) rallied +26c at the highs today to 215.20 in September based on #margin increases and renewed #Frost Risk. These are numbers on the terminal and daily changes that we haven't seen since the 2014 #drought. Helping to drive prices higher today was the fact that the #ICE exchange raised #MarginRequirements on Friday from $4050 to $7500 / lot. This is a 2/3 increase that #Traders had 2 days over the weekend to come up with. Those that are no
In my post from a few days ago, I said that the extent of the damage was not yet known. In the two days since then, the situation has gone from bad to worse. This is now likely the worst #frost in #Brazil since 1994, and it came at a time when the market cannot afford to lose the #production. Initial estimates from the July 19th/20th frost was 1 - 2 million bags lost. Now, the estimates have more than doubled to 3 - 5 million. In the paragraphs that follow, I am going to
"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.