Coffee Futures Rally Helped by Brazilian Real

Coffee futures (arabica) have reached 14-month highs this week with the help of an unexpected ally – the Brazilian Real – despite the production outlook of the robusta variety. Coffee futures are up 310 points today currently trading at $1.5075 per pound at the New York Intercontinental Exchange. With the combination of dryness in the coffee growing regions in Brazil & Vietnam, and the Brazilian Real reaching its strongest level against the US Dollar, the last month and a half has cause arabica coffee futures to rise 20% versus an 8.7% gain in robusta variety futures. Last month alone, a composite index maintained by the Int’l Coffee Organization showed arabica coffee gaining 7.2% which is three times the gain compared to robusta coffee. “It is currently a tale of two different coffee (futures) varieties traded ‘across the pond’ from one another,” said Barb Levy, chief director for The Fox Group’s futures division in Chicago, sharing her fundamental assessment of the coffee futures market. Levy added, “Both coffee varieties have their problems right now, but the prolonged drought in the arabica growing regions are outweighing the production shortages of the robusta type.” Coffee futures trend is up with no top yet in sight. Right now coffee futures appears to be a “buy the dip” market. ALL COMMENTARY IS CONSIDERED OPINION & VIEWS FROM THE AUTHOR AND NOT A SOLICITATION OF ANY SECURITIES. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL...

Coffee Futures Soar as Vietnam’s Output Looking Bleak

Coffee futures are reacting to news from SE Asia that Vietnam’s coffee harvest is expected to decline to a four-year low amid reoccurring dryness which threatens a further downgrade to overall production. Coffee futures are up just over .07 cents today currently trading at $1.3925 per pound at New York’s Intercontinental Exchange. Vietnam mainly produces “robusta” coffee beans and the USDA’s Hanoi-bureau forecasts output there to drop by 7% for the 2016-17 season. What’s reportedly saving more of Vietnam’s coffee crop is the fact that farmers there have access to irrigation water from both reservoirs and underground sources. The USDA-bureau in Hanoi, Vietnam, shared their fundamental view of the coffee futures market by stating, “Despite the dryness, damage to the 2016-17 crop during the key flowering and fruit-setting stage (from January to early March) has been minimal.” The USDA adds, “May rainfall… has been much lower than the same period in the last five years. The lack of May rain is adding stress to coffee trees. If the lack of rains continues in June coffee crops will face additional losses.” Coffee futures trend has been choppy at best for the past six months. Just today coffee futures have broken out above a key resistance level turning the trend “up” in my work. ALL COMMENTARY IS CONSIDERED OPINION & VIEWS FROM THE AUTHOR AND NOT A SOLICITATION OF ANY SECURITIES. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL...

Lack of Rain in Tropics May be Support for Coffee Futures

Coffee futures ended the day lower despite news from the Int’l Coffee Organization regarding lack of rain in both Brazil’s & Vietnam’s growing areas and even exports coming to a multi-year low. Coffee futures – despite bullish news – ended the day .047 cents lower trading at $1.24 per pound at the Intercontinental Exchange. Supply expectations because of lack of rainfall in Vietnam ( the world’s top coffee producing country) and in Brazil’s premier growing region should lend support to robusta prices in the near future. The organization went on to say that, in Vietnam, coffee exports could drop to as low as 1M tons this year – export amounts not seen since 2008 according to Vietnam customs data. Kevin Craney, Director of Managed Futures at RJO Futures in Chicago, shared his fundamental view of the coffee futures market by stating, “There is increasing alarming concern for robusta coffee supplies due to lack of rainfall.” Craney adds, “What coffee beans are coming out of Brazil’s next biggest region of coffee growing are said to be 10%-15% smaller than normal.” The trend for coffee futures is at a crossroads…after finding lows in January an early uptrend emerged, however the rally came to an abrupt halt late last month and has not seen the needed followthrough to sustain the rally. Coffee futures remain in consumer favorable prices relative to the multi-year lows coffee prices are now. ALL COMMENTARY IS CONSIDERED OPINION & VIEWS FROM THE AUTHOR AND NOT A SOLICITATION OF ANY SECURITIES. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CONSIDER WHETHER SUCH TRADING...

Producing Nation’s Currency Devaluation Not Enough to Keep Coffee Futures Down

Coffee futures have ground to a contract low early this year after the devaluated currencies of the coffee producing nations brought coffee prices to new lows when valued against the US Dollar. Coffee futures are up .01 cent today currently trading at $1.1575 per pound at the Intercontinental Exchange. The underlying coffee market actually is reported to be experiencing tight supplies but that tightness has been masked globally by the weakness of the currencies in the major coffee producing nations. There has recently been a Brazilian currency devaluation, a Colombian devaluation, as well as other emerging market economies in coffee producing countries realizing currency devaluations. “The currency devaluation in many of these coffee producing nations can be considered short and medium-term situations and can – as we are seeing – overwhelm the overall fundamental situation,” said Laura Taylor, a senior market strategist at RJO Futures in Chicago, sharing her fundamental assessment of the coffee futures market. Taylor added, “Eventually, however, with new coffee drinkers each and every day coupled with a steady demand for coffee already, the price of coffee will really come to light because the fundamental situation always prevails.” The trend for coffee futures is down however a bottom for coffee futures may be on the horizon. Coffee futures have made a low in mid-January, and a higher mid-term low created just today hovering just above and below the $1.13 per pound support area. If it can hold, this can be a low in prices. ALL COMMENTARY IS CONSIDERED OPINION & VIEWS FROM THE AUTHOR AND NOT A SOLICITATION OF ANY SECURITIES. THE RISK OF LOSS IN...

2016 Crop in Brazil Can Be a Record High, Bust For Coffee Futures

Coffee futures continue to find lower lows as officials in Brazil are encouraged by favorable weather in the top arabica-coffee growing regions and claiming they can see coffee output spike to up to 58% – a record high. Coffee futures are up .025 cents today (after finding a new contract low only yesterday) and currently trading just above $1.14 per pound at the Intercontinental Exchange based in Atlanta. Brazil’s top agriculture bureau has reportedly estimated this year’s coffee harvest to be between 49.1-51.9 million bags which could potentially top the record 50.8M bags realized in 2012. The worst coffee production estimate still comes in near the second best harvest only three years ago before the drought conditions appeared in early 2014. “Brazil is in the midst of a sharp rebound in coffee production thanks to the favorable weather in their top-producing growing regions,” said Gerry Plotkin, a Senior Market Strategist for R.J. O’Brien in Chicago, sharing his fundamental assessment of the coffee futures market. Plotkin added, “The country is reasserting their dominance as the world’s top coffee producing country after a dismal 2015.” The trend in coffee futures is down with no bottom yet in sight. It will take much fundamental change for coffee futures to turn things around, but a major plus in keeping prices low for coffee enthusiasts all over the world. ALL COMMENTARY IS CONSIDERED OPINION & VIEWS FROM THE AUTHOR AND NOT A SOLICITATION OF ANY SECURITIES. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL...

Producer Lifts Estimate on Brazil’s Arabica Inventory: Coffee Futures

Coffee futures may be set to stabilize or rally after a two-season production downturn to drought in Brazil, but with still strong exports mean the drawdown of arabica inventories now reaching 12M bags is quite a bit more than previously expected, a major coffee producer contends. Coffee futures are trading up 55 points today settling near $1.2045 per pound at the Intercontinental Exchange. The weaker Brazilian Real currency helped spark demand of arabica inventories creating more than usual coffee exports. The bumper exports cited the coffee producer to raise estimates to 5M bags shortfall for the forthcoming 2015-16 season. “Coffee importers from around the world have found tangible value by Brazil’s currency creating bargain (coffee) prices,” said Jeff Evans, Vice-President of the Managed Accounts Division for RMB Group in Chicago, sharing his fundamental assessment of the coffee futures market. Evans added, “As arabica coffee stocks run lower, however, less selling can be anticipated bringing Brazilian coffee exports back to their normal average.” The trend for coffee futures remains down but with a possible bottom happening. For now, coffee futures have been the consumers best friend with low prices to be enjoyed as long as possible. ALL COMMENTARY IS CONSIDERED OPINION & VIEWS FROM THE AUTHOR AND NOT A SOLICITATION OF ANY SECURITIES. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL...