Coffee October
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Started by metmike - Oct. 7, 2021, 6:59 p.m.

Coffee Prices Settle Higher after ICO Cuts its Global Surplus Estimate 

   -      Thu Oct 7, 1:39PM CDT

https://www.barchart.com/story/news/2557933/coffee-prices-settle-higher-after-ico-cuts-its-global-surplus-estimate

Dec arabica coffee (KCZ21) on Thursday closed up +4.45 (+2.30%), and Nov ICE Robusta coffee (RMX21) closed up +3 (+0.14%).

Coffee prices on Thursday settled moderately higher after the International Coffee Organization (ICO) cut its global coffee surplus estimate.  ICO cut its global 2021/21 coffee surplus estimate to 2.39 mln bags from 2.63 mln bags as it raised its global coffee consumption estimate to 167.26 mln bags from a prior estimate of 167.01 mln bags.  

On Tuesday, arabica fell to a 1-week low, and robusta posted a 2-week low as rain in Minas Gerais eased coffee crop concerns in Brazil and prompted long liquidation in coffee futures.  Also, weakness in the Brazilian real against the dollar was negative for coffee prices after the real (^USDBRL) on Wednesday dropped to a 5-1/2 month low against the dollar.  A weaker real encourages export selling by Brazil's coffee producers.

Increased coffee supply from Colombia, the world's second-largest arabica producer, is negative for prices after the Colombia Coffee Growers Federation on Tuesday reported that Colombian Sep coffee exports rose +23% y/y to 1.091 mln bags.

Arabica last Friday climbed to a 2-month high on signs of smaller supplies in Brazil.  Conab, on Sep 21, cut its Brazil 2021 arabica coffee production estimate by -8% to a 12-year low of 30.7 mln bags from a May estimate of 33.4 mln bags, down -37% from 48.8 mln bags in 2020.  Also, Archer Consulting said Brazil might have only 21 mln bags of coffee available for export in 2021/22, a -55% drop from a year earlier due to reduced output and inventories.  

Drier-than-normal conditions in Brazil are supportive of coffee prices after Somar Meteorologia on Monday reported that Minas Gerais, a region that accounts for about 30% of Brazil's arabica coffee crop, received only 19.4 mm of rain or 77% of the historical average last week.  The all-important flowering period for Brazilian coffee trees begins this month, and a lack of rain may reduce coffee tree flowering and further curb coffee yields.  Water availability in the soil in Minas Gerais is already at critical levels between 0% and 30%, which is well below the minimum level for crop development of 60%.

Robusta coffee continues to see underlying support as nearest-futures Sep (U21) robusta posted a 4-year high on Sep 20.  Robusta has support from concern about supplies from Vietnam, the world's largest robusta producer.  A lack of containers to ship coffee from Vietnam will hinder exports for the foreseeable future and is bullish for prices.  Also, a record surge in Covid infections in Vietnam prompted Vietnam's Prime Minister to tighten pandemic restrictions.  Vietnam's Sep coffee exports rose +14.3% m/m to 120,000 MT, but cumulative Vietnam coffee exports Jan-Sep fell -4.2% y/y to 1.197 MMT.  In a bearish factor for robusta, however, Conab raised its Brazil 2021 robusta coffee production estimate by +4.5% to a record 16.1 mln bags from a previous forecast of 15.4 mln bags.

Last Thursday, the ICO reported global Aug coffee exports fell -0.1% y/y to 10.12 mln bags, although global coffee exports Oct-Aug are up +1.9% y/y at 118.96 mln bags.

Brazil's crop agency Conab on May 25 projected that 2021 Brazil coffee production would fall -23% y/y to a 4-year low of 48.8 mln bags.  Conab said coffee output would fall since Brazil's coffee trees are in the lower-yielding half of a biennial cycle and since drought conditions in key stages of crop development exacerbated a decline in yields.  

ICE arabica coffee inventories on July 28 rose to a 1-3/4 year high of 2.190 mln bags, recovering further from the 21-year low of 1.096 mln bags posted in October of 2020.  However, supplies have since fallen as arabica coffee inventories fell to a 5-1/4 month low Thursday.  ICE-monitored robusta coffee inventories on May 20 climbed to a 4-year high of 16,017 lots but have since fallen to an 11-1/4 month low of 12,218 lots Thursday.
 

Comments
By metmike - Oct. 7, 2021, 7:01 p.m.
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This is where they grow coffee in Brazil.....the worlds biggest producer.


The higher the number below, the greater the production. 1=highest.    

          

                       


                                    


            

                

By metmike - Oct. 7, 2021, 7:02 p.m.
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Looking at the global picture of coffee production below.

Brazil matters the most!


 



By metmike - Oct. 7, 2021, 7:07 p.m.
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Earlier this year, we had a couple of freeze events in Brazil, one that was a big surprise based on some unique conditions in July.


                Brazil coffee: approaching springtime            

                            13 responses |               

                Started by WxFollower - Aug. 23, 2021, 5:51 p.m.            

https://www.marketforum.com/forum/topic/74122/



Previous discussions/threads:

                Frosts hit Brazil's cane, coffee and orange crops, says weather expert            

                            33 responses |             

                Started by metmike - July 22, 2021, 1:22 a.m.        

https://www.marketforum.com/forum/topic/72552/



    

By metmike - Oct. 7, 2021, 7:11 p.m.
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By metmike - Oct. 7, 2021, 7:13 p.m.
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Lots of rain on the way to trigger robust flowering!

This data comes from the GFS/US model. 

It's constantly updated every day.

http://wxmaps.org/outlooks.php










                               

                                    

                                    


                                    


            

                

By metmike - Oct. 7, 2021, 7:14 p.m.
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Latest 16 days total precip from the 12z GFS Ensemble mean.

Huge rains for coffee-land.

                                    


            

                

By metmike - Oct. 7, 2021, 7:18 p.m.
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I'm showing this article below for a couple of reasons.

1. It has some basic information for, especially beginners.

2. It has a seasonal chart that I want to use to point out a couple of things. That coffee is often under pressure during the June/July harvest, then has some strength while the new crop is developing. This holds most of the time..........when there is NO FREEZE/FROST. Obviously when there is a freeze/frost, the price will spike MUCH higher during that same period..........which was what happened this year.  The other point is that after harvest is over, coffee often sees some strength, sometimes amplified by the market trading dry weather and dialing in risk premium when the crop needs a bloom triggering rain (with sharp drops  when the rain forecast increases closer to the rain event). This could be part of the reason for the drop in Sept to a low in early Oct(from the normal first rain event showing up at the near optimal time for flowering).

Oct-Dec is a seasonally strong time for prices.



COFFEE FUTURES: 7 THINGS YOU SHOULD KNOW

https://atas.net/volume-analysis/market-theory/coffee-futures-7-things-you-should-know/

                                    


            

                

By metmike - Oct. 9, 2021, 3:32 p.m.
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 Coffee Dec '21  (KCZ21)  

    201.35s  +3.45  (+1.74%)  10/08/21 [ICE/US] 

    for Fri, Oct 8th, 2021

https://www.barchart.com/futures/quotes/KC*0/futures-prices

By metmike - Oct. 11, 2021, 4:29 p.m.
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Coffee closed higher again.

https://www.barchart.com/futures/quotes/KC*0/futures-prices

https://www.barchart.com/story/news/2582033/arabica-coffee-closes-higher-after-colombia-coffee-growers-default-on-1-million-bags

Arabica Coffee Closes Higher after Colombia Coffee Growers Default on 1 Million Bags

Arabica on Oct 1 climbed to a 2-1/4 month high on signs of smaller supplies in Brazil.  Conab, on Sep 21, cut its Brazil 2021 arabica coffee production estimate by -8% to a 12-year low of 30.7 mln bags from a May estimate of 33.4 mln bags, down -37% from 48.8 mln bags in 2020.  Also, Archer Consulting said Brazil might have only 21 mln bags of coffee available for export in 2021/22, a -55% drop from a year earlier due to reduced output and inventories.  

Wetter-than-normal conditions in Brazil are bearish of coffee prices after Somar Meteorologia today reported that Minas Gerais, a region that accounts for about 30% of Brazil's arabica coffee crop, received 79 mm of rain or 393% of the historical average last week.  The all-important flowering period for Brazilian coffee trees begins this month, and abundant rain may boost coffee tree flowering and increase coffee yields.  Water availability in the soil in Minas Gerais was at critical levels between 0% and 30%, which is well below the minimum level for crop development of 60%.

+++++++++++++++++++++++++

The weather for coffee is BEARISH!

By metmike - Oct. 12, 2021, 4:55 p.m.
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Coffee prices soared higher today!

 Coffee Dec '21  (KCZ21)  

    213.15s +8.90  (+4.36%)  10/12/21 [ICE/US]

https://www.barchart.com/futures/quotes/KC*0/futures-prices

Arabica Coffee Soars as Colombia Coffee Exporters Scramble to Obtain Supplies

  https://www.barchart.com/story/news/2596776/arabica-coffee-soars-as-colombia-coffee-exporters-scramble-to-obtain-supplies

The coffee weather is still very bearish.


By metmike - Oct. 13, 2021, 8:19 p.m.
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Moderate losses for coffee. Weather still bearish. 16 day rains from 12z GFS ensemble.

https://www.barchart.com/futures/quotes/KC*0/futures-prices


By metmike - Oct. 18, 2021, 7:29 p.m.
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Coffee down a bit today. The given reason was bearish weather but the weather forecast has been bearish for the last 2 weeks.

Coffee Dec '21  (KCZ21)  

    201.60s  -1.80  (-0.88%)  10/18/21 [ICE/US] 

    for Mon, Oct 18th, 2021

https://www.barchart.com/futures/quotes/KC*0/futures-prices

By tjc - Oct. 18, 2021, 8:15 p.m.
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  Coffee is 'due' for a retracement this entire week, most likely putting in a daily cycle low early next week, perhaps near 194, although slightly below 182 would print a 'new' weekly cycle low in the 30th week.

  More than anything, coffee needs time to correct.

  Fundamentally, rain is 'the' excuse.  More likely time is needed to digest/assess the severity of the altered yield as a result of the extended drought's impact on flowering for the next spring  crop.

By metmike - Oct. 18, 2021, 8:31 p.m.
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Thanks tjc!

By metmike - Oct. 21, 2021, 6:19 p.m.
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 Coffee Dec '21  (KCZ21)     

 203.30s -2.25  (-1.09%)  10/21/21 [ICE/US]      

  for Thu, Oct 21st, 2021

https://www.barchart.com/futures/quotes/KC*0/futures-prices

Weather still bearish. 16 day total from 12z GFS ENS below.

By tjc - Oct. 21, 2021, 6:25 p.m.
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Went short today as coffee made a big reversal.

By metmike - Oct. 21, 2021, 11:47 p.m.
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Thanks tjc. 

The weather is decidedly on the bears side right now, although seasonals are up and there are some bullish fundamentals.

Crazy wide daily ranges but that's to be expected when coffee is $2+.

Opened at 206.40.  A high of 208.65 at 5:40am, which was tested an hour later then pressured to the low of 201.55 at 10:35am. Last price was 204.25, as you said a reversal lower.

The Oct high was hit on the 12th at 215.15. 

The Oct low was hit on the 5th at 191.30.

By Jim_M - Oct. 22, 2021, 10:45 a.m.
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A big reversal?  Where?  

By metmike - Oct. 22, 2021, 1:32 p.m.
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Jim, 

As mentioned yesterday, the market made NEW HIGHS for the week early in the session, Thursday,  obviously hitting some strong selling,  then turned around and closed lower for the day.  Is there some reason you don't think this is a reversal?

Prices that went up for 3 straight days, hit resistance,  and reversed down to finish lower.


By tjc - Oct. 22, 2021, 7:44 p.m.
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  I stand by my previous post. 

  Shorted another.

  Will add to my short position on a stop limit sell order.

  IF 19130 does not hold, looking for 181ish, which will then be a daily/weekly low within the daily/weekly timeframes.

  THEN YOU CAN BUY MARCH AND HOLD!

  

By metmike - Oct. 22, 2021, 7:49 p.m.
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Thanks Tim!

Appreciate you sharing your trades and reasoning with us.