Green Coffee Report-August 10, 2016

August 11, 2016

Good Afternoon

Today September finally did what it  has been trying to do 14 working days.  It broke below 1.40 and stayed there.  September closed at 1.3865, down 245 points.  September closed just 10 points from its low.

Although the dollar was down and the Real was up, both of which are bullish for coffee, the market closed down.  It was a year ago that the Real was in its current trading range and the coffee market was also around 1.40.

The weather is good.  No sign of cold weather for the next 10 days.

We will see what happens tomorrow, but maybe we have seen the highs for the summer

Green Coffee Update-August 5, 2016

August 5, 2016

Good Morning

Yesterday September moved to a low of 1.3695 which is the lowest low since June 28 and break through of the support level of 1.40, but the bears could not hold.  September reached a high of 1.4325 and then closed at 1.4210 up 170 points.

On the opening this morning September gapped up to 1.4230 and then proceeded to climb 1.4390 by 8:30.  Currently September is trading at1.4155 down 55 points.  The Dollar and the Real are both up so the market is not influenced by currency.

Question:  Will 1.40 support hold again?  If it does, this may encourage the bulls on Monday.


Green Coffee Update-July 11, 2016

July 11, 2016

Good Morning

September coffee opened up 200 points.  Then at 8:35 September jumped another 100 points.  Currently it is trading at 1.4895 up 485 points.

The weather in Brazil is favorable for the harvest and no cold weather is in the forecast.  Both the Dollar and the Real are reasonably flat.

Here is a report from Morgan Stanley from Friday.


Early buying was met with disinterest as Americas based traders strolled into their offices with little volume to greet them.  The low of 141.60 traded during the opening minute, and the rest of the day would effectively feature a 200 point range.  A mid-day high of 144.30 would prove to be an anomaly for much of the session as prices seemed magnetically drawn to the 143.50-143.85 area for 2 hours as participation waned.  However, end of day buying emerged posting a marginal new high for the day during settlement, ending an inside day on a particularly positive note.  Early focus was on the US Non-Farm Payrolls number, with overnight optimism pervading other markets as expectations for a positive monthly performance reigned.  Ultimately, a better than hoped for +287k number would provide a short term boost to both  the DXY, and more perplexingly for many, the BRL.  With a positive reaction to Brazil’s 2017 fiscal deficit target, the BCB halting Fx reverse swap auctions today in an effort to reduce their inventory of such swaps, and positive indications of US consumer health adding to sentiment for some EM currencies in the absence of expectations of a Fed rate hike, the BRL was able to stem 5 previous sessions of weakening.  In trying to gauge the most important of factors, it is worth noting the previous 5 sessions had also been concurrent with BCB auctions, which had injected a reported US$500m a day in USD demand while pressuring the local BRL. The COT Net-Non Commercial stands at 32792, within expectations, and remains shy of the October 2014 highs.


BCB is Brazilian Coffee Board


It looks like Fx reverse swap auctions are causing the bullishness!!!

Green Coffee Update-April 15, 2016

April 18, 2016

Good Afternoon

For the past two weeks May coffee has closed within a very tight range (1.1980 to 1.2460) while crossing the 40 and 60 day moving averages several times.

Today May closed the week at 1.2295 , down 20 points.

The question is whether the March rally that went as high as 1.35 indicates a change in the downward direction that the market has been experiencing over the past 18 months or is it just a pause before it tries again to break through support around 1.15.  The Real has recovered from its lows and the Dollar has lost some of its strength.  A weak Real and a strong Dollar have contributed somewhat to lower prices.  Therefore the reverse of this trend is bullish.

Also, as we approach the Brazilian winter and the chance of frost in Brazil, the market may not desire to test the recent lows.

So whoever bought at 1.20 or below probably made a good decision

Green Coffee Update-April 05, 2016

April 5, 2016

Good Morning

This morning May coffee is trading at 1.2110, down 170 points, at its low for the day and the lowest in past four weeks.  During this time the market has climbed as high as 1.3640.  Today it is crossing the 40 and 60 day moving averages which have nearly flat lined this year.

The Market movement to the mid-1.30s may have been an over reach.  Since last September the Dollar has strengthened and weakened and the Brazilian Real has done just the opposite.  Today they are trading in the same range as last September and so is the coffee market.

On the Robusta front, last week, traders reduced their short positions to the lowest point in four months.

It looks the market is building a base in the 1.2250 + or – 1,000 points.


December Green Update-October 28, 2015

October 28, 2015

Good Afternoon

After having eight of the past nine days as down days, the market was due for a correction.  Today, December tried in one five minute period to get to 1.20, but only reached a high of 1.1995.  December closed at 1.1925, up 180 points.  Today’s correction was not like some of the more violent/dramatic corrections that we have seen in the past months which suggests to this humble servant that it has limited strength.  Short term we may see the bulls try to exert their influence, but the long term downward trend is still in place.

I have attached two articles.  The first one talks about market trends from a technical perspective. The second article talks about prices for Vietnam’s coffee which is reaching the cost of production and what action the farmers may take if the prices continue to drop.


December Green Coffee Report-Updated Oct. 21, 2015

October 22, 2015

Good afternoon

Today was another down day.  December coffee opened up 20 points and then it started to fall and closed 45 points up from the low at 1.2100, down 375 points for the day.  The attached document  indicates that precipitation will be above normal for the next few weeks.  Neither the Dollar nor the Brazilian Real have moved much in the last week.  So it appears that weather in Brazil is driving the market.  If the rains continue and we have a good flowering Brazil we could easily challenge 1.15 again.

The other attachment indicates that Colombia is cutting its quality standards so that they can sell more coffee.

December Green Coffee-Updated Sept 23, 2015

September 24, 2015

Good Afternoon

Yesterday December Coffee made a new low at 115.05 and closed down 180 points.  Today, December broke through that low to 114.75, but closed up 75  points at 116.20.  These two new lows are record lows for the December 2015 coffee contact.  Coffee did get down to 100.75 in November 2013 and previously was last in that range in December 2008.

Will we get that low again?  The attached article from Morgan Stanley once again talks about currencies.  Today the Dollar is moving higher, but still off of its high reached back in March.  The Brazilian Real is making a new low.  Even if the Real stabilizes, if the Dollar goes back up to its previous high, this market will go lower.

Today the market is responding to currency changes.  Reports of the size of the crop just harvested and the flowering this fall will sooner or later influence this market and over ride the currency issue.  As I reported recently Colombia is aiming for some bigger crops in the next few years.  If Brazil has a good flowering this fall, we could see even further price erosions.

Stay tuned!!

December Green Report-Updated September 18, 2015

September 18, 2015

Good Afternoon

On September 11th I wrote that the daily candle stick graph for December had formed a spinning top and that on Monday we should see a reversal upward.  In fact I got lucky and December did move upward 365 points.  Since then the December contract has moved sideways mostly between 1.175 and 1.20.  For the last three days coffee has formed three more spinning tops.

Today December closed down 20 points at 1.1835.

The Dollar has weakened slightly from its near term high of a few weeks ago which is providing some support for coffee.  But the Brazilian Real is at a record low which is bearish for coffee.

The comments below are from Bloomberg.  The first 90% of the article indicates that Colombia, after replanting 67 percent of the trees is now poised to bring in some record crops.  However, the last paragraph indicates that the world supply is in a deficit for this year and, if rains do not improve, there could be a deficit next year.

The strong Dollar and weak Real seem to be the only things keeping the market from going higher.




Colombia Coffee Crop May Top USDA Estimate as Trees Rejuvenated

Yields rise 45% over the past 2 years as old trees eradicated

Exports seen increasing 9.1% this year on weakening peso

By Aya Takada


(Bloomberg) —

Coffee output in Colombia, the world’s second-largest producer of Arabica beans, may climb about 4 percent next year as replanted trees improve yields, according to the country’s growers group.


Production will rise to as much as 13.7 million bags from 13.2 million estimated for this year, said Roberto Velez, the chief executive officer of Colombian Coffee Growers Federation. The projection exceeds the U.S. Department of Agriculture’s June forecast of 13 million.


Arabica coffee, the kind used in specialty drinks such as those made by Starbucks Corp., this month tumbled to the lowest since January 2014 as grower currencies slid against the dollar, encouraging producers to increase exports. About 67 percent of Colombia’s coffee farms, representing some 640,000 hectares, have been replanted over the past five years, Velez said.


“These new trees are starting, or have started to bear new fruit, giving us this increase in production,” Velez said in an interview in Tokyo on Wednesday.


Yields this year are projected at 16 bags per hectare, up 45 percent from 2013 as the average age of trees fell to 7 years from 9.5 years as a result of the farm renewal, he said. Next year, 50,000 hectares will be replanted, while the nation’s total farms will remain steady at about 950,000 hectares, he said.


Increasing Exports:


Colombia’s coffee exports may increase 9.1 percent to 12 million bags this year as a weaker peso makes its crop cheaper to customers buying in dollars, Velez said. A bag weighs 60 kilograms, or 132 pounds.


“As an export-driven sector, the coffee industry in Colombia is in a happy mood” due to the falling currency, Velez said.


The Colombian peso has declined 16 percent in the past six months, the second-biggest loser among emerging-market currencies, amid expectations that the U.S. Federal Reserve will raise interest rates.


A weaker peso boosted coffee farmers’ income, which will also help increase yields as growers will spend more to buy fertilizers to expand output, Velez said.


The global market will be in deficit of 4 million to 7 million bags this year as adverse weather curbs output in other nations, Velez said. Shortages won’t be resolved next year unless output improves in Brazil, the top producer, he said.


September Report-Updated August 10, 2015

August 13, 2015

On August 5 I wrote that sooner or later fundamentals will become more important than the strong Dollar and the weak Real and/or the traders with short positions will buy the market in order to cover themselves.  Today, the September coffee contract moved aggressively upward to close at 1.3350, up 570 points.  With first notice day a little over a week away, some of the activity on Friday and today was traders switching from September to December, but mostly the action was from the realization that the current crop will be smaller than expected.  We are seeing a late harvest this season and that usually implies a smaller crop.

I am attaching two articles.  One from Friday by Morgan Stanley and another from Quasar Group.

After today’s upswing tomorrow could be a down/retrenchment day, but do hold your breath.