“Godzilla El Nino” Forecast Getting the Attention of Coffee Futures

Coffee futures changed its trend just last week (from down to “up”) just before the US National Weather Service’s Climate Prediction Center posted an “El Nino” advisory that could be potentially devastating for the global coffee market. Coffee futures are currently down a nominal 35 points at this time, trading at $1.3835 per pound at the Intercontinental Exchange.

The weather service’s Pacific models are suggesting the forthcoming El Nino to be bigger and badder than the devastating one during the winter of 1997-98 with scientists predicting it will begin this winter and extend into spring (for the Northern Hemisphere). If the weather model plays out as the scientists predict, there is an expectation for food production to be disrupted worldwide and to reach nearly every coffee-producing region.

From what I understand, this potential storm may be different from just making food more expensive, but rather interfering with the coffee crop’s global supply,” said Barb Levy, chief director for The Fox Group’s futures division in Chicago, regarding the fundamental assessment of the coffee futures markets, Levy added, Millions of people rely on coffee as their primary livelihood from southeast Asia in the western Pacific, to Central & South American coffee crops on the other side of the ocean.”

As mentioned above, the trend for coffee futures has just turned to the upside. I sure hope the big coffee producers are hedging their purchases with coffee futures because this can be a potential job killer if there is little coffee to “sell.”

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