Coffee futures are once again poised for more upside action as prolonged drought in Brazil is claiming much of that nation’s coffee crop. Coffee farmers are preparing for the worst as Brazil heads for its first three-year production decline since 1965.
Production from the world’s top-grower of the Arabica Coffee variety is expected to drop as much as 18% (from last year at this time) when the harvest ends next month – this coming from a 3.1% decline only last year according to Brazil’s National Coffee Council’s estimates. The Council also estimates coffee farmers collecting less of a harvest next year which would be the longest slump since the mid-’60’s.
Christian Moreno, a commodities broker for HighGround Trading Group in Chicago, shared his insight regarding the current coffee futures situation by stating, “It appears as if the only way out of the coffee situation in Brazil is a miracle of much needed rain.”
The trend for coffee futures has resumed up since late last month. The initial margin requirement for coffee futures is $5,700 per contract so I must choose the trades wisely. I have coffee futures higher (in my work & studies) into the end of the week. With coffee futures up 940 points today, our target is about 700 points higher.
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 CONDITION.
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