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The Trade is Bullish (the Roaster is Not)

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 the data.

The #coffeefutures "C" Market is at the highest price in the last 7 years, so we would expect the commercial short position to be at a similar high. Yet despite rising prices the Commercial short as a percent of OI has actually declined since January from over 50% to the current level of 43% (vs 41% avg of last 5 years). This suggests to me that the #Trade is in fact #bullish.

The #Roaster, by contrast, is at the lowest point of coverage for this period since the 2016 rally (24% vs 30% 5 year avg). The implication is that the roaster is