I’ve bought_&_roasted green_beans in Yemen_&_Ethiopia this year.
I travel a bit, & have a little expertise; imo there’s good & bad coffee (and beer & wine, and people) damn near everywhere.
We’ve enjoyed a momentous run here - i’m tracking longer-dated coffee-futures puts for a reversal lower at some point…
Will Coffee_Futs trade below $1? Does BRLUSD matter?
As mentioned previously, I get interested when Coffee Futures trade below a buck.
Last month we got news of massive dumping of coffee inventories by Brazil.
The Brazilian Real plays a part in Coffee Futures as well, as does 'seasonality.'
Here's a post I saw today:
Will Smart Money drive Coffee Lower?
Some give-back in those JO-call-options, after 300% move
I used to live & breathe (in a trading-sense) coffee futures - fundamentals, wx, warehouse storage, etc back in the 90s. It remains a good trading market.
Coffee Prices Close Sharply Lower On Forecasts For Rain In Brazil
Coffee prices on Monday plunged with arabica at a 2-week low and robusta at a 3-week low. Forecasts for beneficial rain in the coffee-growing areas of Brazil sparked heavy long liquidation in coffee futures on Monday. Somar Meteorologia said Monday that the coffee-growing regions of Brazil would receive 20-35 mm of rain in the week starting Sep 20.
Coffee prices surged to 8-1/2 month highs Sep 4 on concern that excessive dryness in Brazil will undercut coffee yields. Maxar said last Thursday that recent dryness across the northeastern portion of Minas Gerais would not be favorable for coffee flowering. The region has received as little as 10% of normal rain in the past month. Also, the U.S. Climate Prediction Center on Thursday said a La Nina weather pattern has emerged in the Pacific Ocean, which could lead to below-average precipitation in Brazil in Q4, according to Maxar.
Coffee prices also have support on dwindling inventories. ICE-monitored arabica coffee inventories on Friday dropped to a new 20-1/2 year low of 1.117 mln bags. Also, ICE-monitored robusta coffee inventories on Aug 28 fell to a 20-month low of 10,908 lots.
The recent up move in coffee prices has been supported by fund buying. Friday's Commitment of Traders (COT) report showed that funds boosted their net-long positions in ICE arabica coffee futures by 5,866 contracts to a 4-year high of 48,450 contracts in the week ended Sep 8. Also, funds boosted their net-long positions in ICE robusta coffee futures by 2,105 contracts to a 3-year high of 15,240 contracts in the week ended Sep 8. The extreme long coffee positions by funds, however, increases the threat of long liquidation pressure.
Coffee prices also have support on data from ICO from Sep 1 that showed global 2019/20 coffee exports during Oct-Jul fell -5.3% y/y to 106.59 mln bags.
The outlook for a smaller coffee crop in Vietnam, the world's largest robusta coffee producer, is boosting robusta prices. The CEO of Simexo Dak Lak, Vietnam's second-largest coffee exporter, forecast that Vietnam 2020/21 coffee production will fall -4.8% to 1.72 MMT, citing lower coffee yields from a drought this year during the coffee tree flowering period in Vietnam's Central Highlands, the country's biggest coffee-growing area.
Robusta coffee is seeing support from tighter supplies after the General Department of Vietnam Customs reported Aug 30 that Vietnam's cumulative Vietnam Jan-Aug coffee exports fell -1.3% y/y to 1.161 MMT. The USDA's Foreign Agricultural Service (FAS) on June 10 forecasted that Vietnam's 2020/21 coffee production would fall -3.5% y/y to 30.2 mln bags.
On the negative side, the International Coffee Organization (ICO) on Sep 1 projected a 2019/20 coffee surplus as the effects of the global COVID pandemic undercut coffee demand and boosted supplies. ICO on Tuesday said that it now sees a global 2019/20 coffee surplus of +952,000 bags versus its previous forecast for a global coffee deficit of -486,000 bags.
JO call-options still killin' it
"Real things" like commodities have cost-of-production and useful 'historical lows' that can be traded against.
Those aren't guarantees, but useful info that can be traded against.
400% move on those JO 32 xmas calls
Coffee and JO swinging lower - Brazil's a mess and the Real is weakening - coffee maintains a weak relationship w/ the currency.
Commodity ETF (ETN) options are generally thin in back-months, but I maintain that they ARE worth a look.
Fwiw, I do much of my short-term trading in retirement accounts, as it makes sense to me.
My biggest 'trades' in taxable accounts are futures & index options, as they are tax-advantaged.
25% move ain't bad, 200% using Options
'Serious coffee traders' use the futures markets - I've traded coffee futures since '96 I think?...
And ihub OTC traders expect multi-baggers, even tho studies show most OTC traders (and likely ihub-traders) lose money overall.
Nevertheless, JO continues to track Coffee Futures OK, and more importantly, they track coffee directionally and have traded options available (particularly useful for retirement accounts for example).
Low Volume & Open Interest may limit their usefulness, but the JO Dec 32 calls are up 200% since mentioned last month, the 34s obviously a bit less.
Fwiw many commodities have similar ETNs w/ traded options.
Are we there yet?
Even 'xmas coffee' is under a buck, and Mar '21 nearly there
JO tracks OK for non-futures traders
For the past couple years Coffee has been "working" this 15-year low area... but I recall a time where we traded 1/2 this price so no guarantees.
COVID, BRLUSD, etc.
GLTA w/ your trades.
Pro-Life - glad I was not in JO for quite while. I would not be surprised if the fund was being pilfered for some time in advance of it's closing. Heck, if Wells Fargo can rob it's customers and noone goes to jail, anyboy can, right?
Think about all the cowboy movies we saw growing up. The stage coach driver never robbed his own passengers. How times have changed in the "Fall of the Roman Empire" style the US has been in?
New WFC charges>>>
Kevin, let me know if you are a bit interested in RIBT. I send out group bcc emails to friends and fellow investors when I find info. If not, just ignore this question.
This chart overlaid on coffee had no correlation... weird but no loss, at least on my part... I stay mostly involved in the futures markets for trading.
JO to be shut down April 12th
2 others with volume>>>
Are Coffee Prices Percolating ?
$JO Keep A Close Eye On Coffee
Coffee Futures---Coffee futures in the March contract is trading slightly higher for the 3rd consecutive session up 30 points at 123.60 a pound as I'm currently sitting on the sidelines, but I will be recommending a bullish position if prices break the 5 week high of 125.85 while placing the stop loss under the 2 week low standing at 119.10 as the risk would be about $2,600 per contract plus slippage & commission.
Cheaper way to play, JO, coffee unleveraged ETN>>>
krk, it has worked for RJA, so far anyway, lol.
Seems we got William O'Neil's double bottom with the new low (14.65) on 5-feb lower than the old low (14.67) on 12-dec.
William O'Neil a great investor, author and founder of Investors Daily likes a double bottom with the new low lower than the old low. He believes somewhat in market manipulation and a new low triggers programmed selling. Guess who buys? I hope thus thought works here.
And, I got a lot on RJA, a Jim Rogers Food fund. Same situation there.
$CORN- Another food thought, Trump is meeting with corn farmers. Sounds like he will support biofuels. Corn is now below cost for most farmers, coffee probably is too.
Yer da bestest Derek, good luck...
still waiting, no add yet here. will watch again tomorrow to see if we get a higher high and higher low ;)
Huge volume day Derek....feels like today may have purged enough people to start a climb? Tomorrow need to see a higher high than todays high, for a buy signal, jmo....otherwise let her keep going lower....jmo.....
Yep and we heard a hard spring freeze in Brazil killed many coffee bean trees.
I can hardly wait for the turn upward...
October 30--The Moment Of Truth For Coffee Is Coming
Lower highs since November 2016, but higher lows since 2008.
Price failure has become expected.
The potential for a La Nina in Brazil could change the pattern of trading.
Critical resistance continues to drop.
The potential for a sharp upside correction is rising.
No big deal... hmmmm...
Cold Coffee going to warm up? Testing potential support zone after large decline this year. $JO $SBUX $DBC
From Chris Kimble @KimbleCharting -
JO at a strong support here.
Long w/calls 6 months out... time will tell.
Coffee Prices Could Be About To Surge Seeking Alpha
Coffee prices have fallen sharply since late last year.
We think prices have bottomed and a potential deficit this year could lead prices to surge.
Stocks-to-use ratio is forecast to be 30%. The lowest level in almost a decade.
With consumption rising and production expected to fall, we think now is the time to go long with coffee.
JO (coffee fund) looking better
It should have a good day, futures looking up pre market, nice up volume
Not moving as I thought but, it'll come.
Hot Coffee - Looking Good
Charts in link plus>>>
Weather Patterns Shrinking Coffee Production
Cornucopia’s Take: Coffee drinkers may reasonably expect production and market demand to shift as coffee country grows drier and warmer. Coffee farmers are losing crops, and sometimes trees, forcing them to consider new livelihoods.
On Slopes of Kilimanjaro, Shift In Climate Hits Coffee Harvest
Rising temperatures and changing precipitation are taking a toll on coffee farms worldwide, including the plantations around Mount Kilimanjaro. If the world hopes to sustain its two billion cup-a-day habit, scientists say, new climate-resilient species of coffee must be developed.
Melkseveck Mushi sat on the porch of his brick house on the flanks of Mount Kilimanjaro in Tanzania in October, talking about the prospects for his increasingly beleaguered coffee farm. Mushi owns 2,000 coffee trees, planted among bananas and beans on several acres of land that he inherited from his father. He’s also secretary of Okaseni, a cooperative of 80 small coffee farms around Kilimanjaro.
Alternating between English and Swahili, Mushi recalled that the region’s climate was once ideal for growing coffee, with stable temperatures hovering around 70 degrees F and dependable rainfall. But in recent decades, he said, the climate has become increasingly inhospitable. Temperatures are rising, and the rains often come too late to turn the delicate white flowers into cherries, the fruit of the coffee.
Read the link for the rest of the article
Growth In Caffeine Still Potent, But Potential For Buzz Kills Looms
Americans are taking their coffee more seriously.
Despite its image, coffee is a highly concentrated industry.
Demand is not a problem, but supply is likely to become much tighter.
A few years ago, something and a quarter would get you a decent cup of coffee. These days? Something and about 225 quarters will get you a share of Starbucks (NASDAQ:SBUX) or Dunkin' Brands Group (NASDAQ:DNKN). Even after throwing in another 20 quarters for a coffee, it's still a pretty good deal.
Long a breakfast afterthought, coffee has emerged as one of the strongest segments of the restaurant and dining industry over the last generation. It's a $48 billion business in the U.S. alone, with more than half of that dedicated to specialty coffee.1 And there's plenty of room for growth - about 500 million cups of coffee are served daily around the planet, meaning almost 7 billion people are grumpier than normal today.2,3
There are a number of factors driving coffee's moment. People are developing a serious coffee habit at an earlier age; among 18- to 24-year-olds, daily consumption has risen to 36 percent, nearly triple the 13 percent who drank coffee in 2008.4 Millennials also spend about $80 per month on coffee, well above the U.S. average of $67.5 More than other sectors of the restaurant industry, coffee shops have been in the forefront of innovation, harnessing mobile apps to drive customer traffic. One in every 5 Starbucks customers pays with a mobile phone, and the company is taking 5 million mobile orders every month.6 And while the U.S. slowly shakes off the last effects of the 2008 economic collapse, coffee has been found to be fairly resistant to hard times, losing surprisingly little ground during the Great Recession. According to the International Coffee Organization, people shifted consumption patterns, drinking about the same amount of coffee, but brewing it at home and using less expensive brands to save money.7
Imagine the typical coffee outlet. It probably involves a barista with a man bun and liberal arts graduate degree running high-end coffee bean through an Aviatore Veloce TurboJet 100 Coffee Maker, an intimidating piece of equipment that more resembles a jet engine than a Mr. Coffee, while folk music plays softly in the background of the indie coffee shop. But that's your imagination; the reality is that coffee is a highly concentrated sector, with more than 60 percent of the U.S. retail market controlled by Starbucks or Dunkin' Brands.8
The Seattle-based Starbucks is the undisputed leader in the business, with almost 15,000 stores in its Americas division, plus another 5,500 in China, Asia and the Pacific.9 The coffee boom has pushed its net revenues to $13.3 billion during the most recent year, a 21 percent increase since 2013.10 Its stock, which traded in the low $20s as little as five years ago, has been selling in the mid- to high $50s over the past year.
On the other side of the country, Canton, Mass.-based Dunkin' Brands has seen its revenues from coffee jump nearly 8 percent to $614 million over the past year.11 The company has 8,431 U.S. outlets - almost all franchises, and nearly double the 4,815 that it reported a decade ago.12 Like Starbucks, Dunkin' stock has risen from the low $20s five years ago to the mid-$50s, although with considerably more volatility.
If there's a wild card in the coffee business at the moment, it's J.M. Smucker Co. (NYSE:SJM), an Orrville, Ohio-based corporation better known for jellies and jams than coffee. In the depths of the economic collapse, however, the company bought Folgers coffee from Procter & Gamble (NYSE:PG) for $2.95 billion.13 The acquisition has paid off, with net sales of coffee increasing 8 percent last year, largely on the strength of single-serving pods sold under a Dunkin' Donuts brand.14 Smucker also has taken aim at the growing Hispanic market, acquiring the 80-year-old Café Bustelo brand as well as Café Pilon, both mainstays of south Florida's Puerto Rican and Cuban coffee cultures.15
Investors may also want to be aware of a third player in the North American restaurant business - Restaurant Brands International (NYSE:QSR), the Oakville, Ontario-based owner of Tim Hortons and Burger King that takes credit for selling 8 of every 10 cups of coffee poured in Canada.16 While the Canadian market may not be the world's largest for coffee, Hortons has reached iconic status. Coffee is the most popular beverage in Canada, and the country leads the rest of the world in per capita donut consumption; Hortons sells both.17
Strong Demand, Tight Supply
Global demand for coffee is strong, no doubt; it's the second most traded commodity, trailing only oil.18 Investors need to be reminded that coffee is an agricultural commodity and that agricultural commodities are subject to extreme fluctuations in price.
One of the most common maladies of coffee plants is a fungal disease known as coffee rust, which was first reported in East Africa in 1861.19 The disease initially causes defoliation, as well as death or yield reductions in subsequent years. A severe outbreak in Central America during the 2012-13 growing season dropped the harvest by 37 percent in El Salvador and 20 percent in Nicaragua. The outbreak cost growers more than $300 million.20
Another growing issue involves labor. Coffee is grown in a narrow belt between the Tropic of Cancer and Tropic of Capricorn, with about two-thirds of the harvest coming from four countries - Brazil, Vietnam, Colombia and Indonesia.21 A lack of workplace standards in many countries has led to poor housing conditions, low wages and child labor, even in places like Hawaii.22 Outrage over the poor working conditions has fueled the fair trade movement. While the movement has encouraged patronage from Millennials, who frequently like making social statements with consumption patterns, the higher labor prices can cut into profits for coffee businesses.
The biggest problem for coffee, however, may be unsolvable. Wild Arabica beans, which make up about 60 percent of coffee, could be extinct by 2080 because of climate change, according to a 2012 study released by the Royal Botanical Gardens, Kew.23 The amount of land that's suitable for coffee could be cut by one-half as early as 2050, according to another study.24
This isn't to say that coffee is a bad long-term investment; it's a much sought-after product in a growing market. But investors should take a long view and be aware that coffee will always be a commodity that's subject not just to the whims of the market, but also to the whims of nature.
I agree, this cold winter will certainly cause demand to go up, on top of the South America coffer plants killed by the freeze their last winter.