Coffee price has created lengthy declining wedge pattern that appears to have been broken out higher and now fallen back to classically "retest" the breakpoint. Today marks the first upwards recoil for this vicinity and suggests the eventual move higher as such a pattern implies. This is a daily continuous candlestick chart. In addition, drawn from valid pivot points that include the contract low, is an Andrews Pitchfork that seems to contain the price nicely and therefore serve as a guide in further price discovery.
Concur on your analysis hayman.........wonderful price chart showing it.
Coffee, historically has seasonal strength here, which used to be seen as risk premium for the upcoming frost risk season.....June-August
However, there hasn't been any MAJOR widespread damaging freezes in over 2 decades.......there were 2 really bad ones in 1994.
The reason for lack of freezes/frosts, besides beneficial global warming/climate change is the frequent destructive freezes in the 60's/70's.......during global cooling forced coffee growing/growers north(closer to the equator) in Brazil.
Coffee Frost and Drought History
|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.
Our awesome web designer is working on these maps/graphs messing up the text.
Glad you brought out coffee today. Getting close to the time to watch the weather for potential freeze threats:
This is a temperature map for the atmosphere around a mile up on May 17.
Some cool but not cold air headed to far S.Brazil in a week. on this map...........that I won't post because it might mess up this great thread.
Where the heck is Brazil you might ask?
The center of the map with all the yellow/red is the South Pole. If you go all the way straight up then turn right..........that's South America.. The outside periphery of the circle is Brazil.
Coffee is grown in Mineas Gerais which is near the northeast edge of what this map shows of Brazil.
Thanks so much for putting it out here as another weather trading commodity that get my adrenaline going!!!
All other market discussions are especially encouraged here......like gold from beck last night.....so we can generate interest from even more folks.
Price looks very cheap right now but I remember first trading coffee in the early 90's when it was getting close to 50c.
I wasn't watching Brazil's weather in June 1994(focused on the grains and we didn't have the detailed global weather maps back then) when the major freezes hit and caused the front month coffee price to triple ......above $2.60 on the spike, in a flash.
I have only traded options 2 times and on that occassion, sold some $3 coffee calls and collected the entire premium on them.