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
#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.
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---
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
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
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
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