Anyone trading coffee? It’s at prices not seen in 15 years. Seems like a low risk long trade. Get a late year contract and sit back and wait or get some options. As they say, they won’t sell it for nothing, but at current prices, it’s certainly pretty cheap?
Good start for a new thread Jim..
I'll try to add later........thanks
Let me change my post a little bit. I bought a Dec contract because it’s....well....a cheap cup of coffee. If it decides to limbo a lot lower I can live through it.
Coffee used to rally in May, dialing in risk premium for a potential frost/freeze but the last severe one(s) were in 1994 because they moved the coffee plantations farther north, closer to the equator after devastating freezes in the previous decades in far Southern Brazil.
Global warming has helped out a bit too.
This is where they grow coffee in Brazil.....the worlds biggest producer.
The higher the number below, the greater the production. 1=highest.
History of frosts/freezes and droughts in Brazil thru 2000.
|Date||Severity (Damage)||Coffee Frost or Drought|
|1902 (Late July/early August)||Devastating||F*|
|1918 (June 24-26)||Severe||F*|
|1942 (Late June/early July)||Severe||F*|
|1953 (July 4-5)||Severe||F*|
|1955 (July 30-August 1)||Severe||slight F|
|1962 (July 25-26)||Minor||F*|
|1963 (August 5-6)||Moderate||F and D|
|1966 (August 6)||Severe||slight F|
|1967 (June 8)||Minor||F*|
|1969 (July 9-10)||Moderate||F*|
|1972 (July 8-9)||Moderate||F*|
|1975 (July 17-19)||Very Severe||F*|
|1978 (August 13-16)||Moderate||F*|
|1979 (June 1)||Moderate||F*|
|1981 (July 20-22)||Severe||F*|
|1984 (August 25)||Minor||F*|
|1994 (June 25-26 and July 9-10)||Severe/Very Severe||F and D|
|1999 (August to November)||Severe (40% crop lost)||D|
|2000 (July 17)||Moderate (est)||F*|
* In most cases frost or drought was not indicated by the source. Although only F is written in these cases it is likely a combination of the two forces that caused a devastating coffee crop.
Coffee charts going back 10 years:
1 Year Below
Drought in Brazil in 2014 caused a spike
Drought in Brazil and bad weather globally in 2010 caused the 2011 spike
Looks to me that the $ is having a negative affect on coffee prices.
Every candle is 6 months, dating back to 1974. Interesting symmetries, suggestive of support and reversal here.
Thanks very much hayman!
As long as CO2 continues to increase, along with the best weather and climate in the last 1,000 years for growing crops, we are having a tougher and tougher time to hurt world food/crop production.
The next potential weather threat to coffee would be a freeze, with seasonal chances of weather getting cold enough for a freeze starting around early/mid June. However, as noted above, with coffee country moved much closer to the equator, along with beneficial global warming, chances of a MAJOR damaging freeze event in any one year now are something like 1 in 20.
This would be a great place to buy however based on your analysis.
Some quotes from investing.com
Coffee Market Factors: Bullish factors for coffee include (1) projections from Conab that Brazil 2019/20 coffee production will fall -18% y/y to 50.5 mln bags as the crop moves into the lower-yielding half of a 2-year cycle, and (2) USDA projections that global 2018/19 coffee consumption will climb +2.9% to a record 163.219 mln bags.
The Market Maker on coffee C is still NET SHORT, but it is reducing its net short. Indeed, on the basis of last week data, MM is INCREASING "only" long and simultaneously DECREASING "only" short. Check with attention the data: COFFEE C Disagggregated futures ONLY. MM only long 39823 (+1079); MM only short 121562 (-1609). The MM net position reduced. Do you remeber the beginning of the rally during last October-November 2018? Step by step. With patience.
for first time 2 green weeks around FND from long long time. This is nice change for bulls.
WEEKLY HAMMER and followup confirmation shown on the December Coffee contract, RSI bottomed out.
Begrudgingly, I must admit that Jimmay is the dart throwing champion of this forum. His coffee call, though a tad early (as most geniuses are). Is that called premature , whatever... Coffee rocked and today I sold out ., Wanna thank the Jimbo for his heads up and give the dude major props for generously sharing the wealth of insight. I'm higher than the silverspiker right now, so pardon any grammatical guffaws!
!!! Thank you! Glad you made some money. I made some money and took a couple of my friends along for that ride as well