Coffee futures will have to contend with Indonesia’s growing consumption & demand in the next two years. Coffee industry experts there expect consumption to spike by a record one-third as income and population increases on the island nation.
The chairman of the Association of Indonesian Coffee Exporters & Industries claims coffee demand will probably rise to 400,000 metric tons in 2016, from what is predicted to be 300,000 this year, and what was 260,000 last year. Indonesia is the third-biggest grower of the robusta coffee variety, and rising domestic demand there may reduce supplies of their own use – where robusta is said to account for 80% of the use.
Kevin Riordan, director of research at Capital Trading Group in Chicago, had this to say regarding the current coffee futures situation, “Demand for coffee in Indonesia is likely to increase due to a rising population and quality of life increase as well. An improvement to the quality of coffee itself will also improve demand.”
The trend for coffee futures remains up, however with a top (temporary) possibly in sight. I am having challenges trading coffee futures at the moment because initial margin for this market is just over $8,000 per contract. Having a position in this market, plus gold at the same time (along with other markets), is asking for too high a margin vs. equity scenario.
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.