#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.
#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
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
A few months back I wrote about the +22 inversion in #Robusta #coffeemarket and how that market gets "squeezed". Since then, the F/H more than doubled to a high of $67/MT. This is not simply a few trade houses "playing games" with the #stocks, but indicates some strong #fundamentals. I would argue that despite the impending #Vietnam crop, this #calendarspread still has #bullish fundamentals behind it and could even rally to new highs. Vietnam Before, I talk about why this c
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
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
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