Good Afternoon

Today, December closed up 355 points at 1.2430, the highest close since August 31^st.  Neither the Dollar, the Real, nor the weather appeared to have changed much from yesterday to today.   And I have not seen any bullish crop reports.

So what happened?  For six days the market has tried to go higher or tried to break through 1.2250.  At 12:45 with about twice the normal volume December climbed to 1.23.  During the next five minutes with about five times the normal volume December went up another 200 plus points to 1.2525.  December then retreated to 1.23 before a close above 1.24.  Is this the break out for which the bulls have been looking?

The attached article states that China will grow its consumption of coffee significantly over the next several years as consumer spending increases on “luxury” crops such as coffee.

Good Afternoon

Today December coffee closed down 60 points at 1.2075.  The last two days have represented two candlestick spinning top days.  Also, each day the daily highs have been lower than the previous day and the daily lows have been higher than the previous lows.  In other words they have been inside trading days.  Clearly, the market is consolidating.  There is good support around 1.15 and good resistance above 1.2250.  A break through of either one of these levels could mean that we are setting a new short term trend.

On a long term basis the trend is still down.

The Dollar is not losing strength.  The Brazilian Real is not gaining strength.  Rain, although light, is returning to the Brazilian coffee growing areas.  However, the world supply of coffee is still low.

Consolidation should continue for a while until more convincing information is available that leans strongly in one direction.

Good Afternoon

Today the coffee market closed most unchanged at 116.55 up .15 for December.

Brazil is clearly having some problems.  The Real continues to fall and its bonds have been down graded.  And the future does not look much better.

So producers are encouraged to sell at these prices, because, even if the market stays where it is, the producers will get less per pound if the Real continues its decline.

On a bullish perspective, if you look at a daily candlestick chart, generally when there is a spinning top like today, the market turns and goes

in the opposite direction.  This situation has occurred at peaks and valleys over the past year.  Will there be a reversal and an up market on Monday?  Maybe!!

Have a great weekend!!

Good Morning

On Monday the December contract reached an interim day high of 1.2685, but closed down 25 points.  Yesterday December closed down 350 points at 1.2080.

This morning we made a life of the contact low at 1.1915.  We have recovered somewhat since then to 1.1970 as I write.

Some of this decline may be caused by an overall decline in commodities and an anticipated softness in world markets, but the coffee market is still also being influenced by currencies, especially the US Dollar and the Brazilian Real.  A year and one half ago the Real was at .51.  Last week it was down to .28.  Today it is down to .267.   The Real has lost almost 50% of its value.  Meanwhile the Dollar has gone from an exchange rate of 80 a year and one half ago to a high in January of 100. It is now at 95.  With Dollar gaining value and the Real loosing value the Brazilian coffee producers are encouraged to sell.  And with them encouraged to sell, buyers are not necessarily encourage to buy, thus a price decline.

In addition there has been continued talk about the small crop in Brazil because of the drought earlier this year.  The drought has had two effects on the crop:  the production of fewer beans and the production of smaller beans.  The later has not received much press so I thought that I would comment.  Small beans mean more beans per bag and thus fewer bags.  Therefore the number of 60 kilo bags in the current Brazilian coffee crop is reduced because of fewer beans and smaller beans being harvested.

The industry still does not have final crop quantity, but currency valuations continue to have a greater influence.

Good Afternoon

Today was another correction day.  We have now had three big (over 400 points) correction days in the last six days.  After a big up day on the eleventh, we have seen December go down 510 points, up 535 points, and today down 425 points to close at the lowest level since the seventh, 1.3480.  The reason for the dramatic swings is that traders and producers can not figure out if currency valuations or Brazil’s current crop is more important.

The attached article from Dow Jones highlights two new players in the currency game, Colombia and Vietnam, whose currency is also loosing value, just the Brazilian Real, against the US Dollar.

I just talked with someone whose family grows coffee in Brazil.  His comment is that the crop is expected to be 44MM bags which is the lowest estimate I have heard.  I am sure that the bulls and the bears will continue to battle it out for another month or two when the final numbers are in for this year’s crop and the flowering begins again in Brazil.

The second article is about the internet and domain suffixes.  Coffee is now available.  Maybe I should change my web site to www.fieldcoffee.coffee?

Good Afternoon

On July 28^th the September contract hit its all time low of 1.2025.  Since then, September has wandered up to close today at 1.2580, up 100 points on the day.  Although the price of coffee is still strongly influenced by the value of the Dollar and, even more, by the value of the Dollar and the Brazilian Real, sooner or later fundamentals must kick in.

I am attaching a Dow Jones article that suggests that the current harvest could be quite smaller than expected.  This article is the first that I have heard about a small crop in Brazil.  And then again it could be just someone who is long and wants to get out at a higher price.  And on the other hand there are a whole lot of people who are short and need to get out if this crop report is correct.   Hold on to your hat, we could have another ride upwards.