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.


December Green Coffee-Updated September 11, 2015

September 14, 2015

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!!

December Green – Updated 09/02/2015

September 2, 2015

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.


December Green – Updated August 24, 2015

August 25, 2015

Good Afternoon

For those of you who are short this is good news, otherwise, well, it is not good news.  Today, once again coffee is down significantly.  By 4:30 AM December was down 300 points.  At 10:15 there was a good rally up 300 points, but it was not sustainable. December slid down the rest of the day to close at 1.2170, down 470 points.  The market is now down nearly 2,000 points in four days, or 15+ percent.

Will it rally tomorrow?   The stock market dropped big time today, but came back  somewhat to close at its lowest low since February 2014.

First, we had strong Dollar and weak Brazilian Real, then a weak Vietnamese currency, and now China.  All areas are now being impacted.  Even Gold which rallied a little last week fell today.

What a mess!

December Report-Update Aug 21, 2015

August 24, 2015

Good afternoon

Today was a big down day.  One importer that I talked today characterized the market as “in the Tank”.  I guess that is fair.  Today, December closed down 600 point at 1.2645. So in the past fourteen days the market has gone up 1300 + points and down an equal amount which is a 10% swing in both directions.  Can it make up its mind?  Obviously not!!!  Fundamentals versus Currency!!

Once again the attached article mentions currency as the reason for the market decline.

But this market does have a tendency to go dramatically in one direction and then, the next day, go in the other direction.  Will Monday be an up day?

December Green-Updated August 15, 2015

August 19, 2015

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

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.


September Report-Updated August 5, 2015

August 6, 2015

Good Afternoon

On July 28th 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.


Updated 07/22/2015 – September Report

July 23, 2015

Good Afternoon

Today the September coffee contract closed down 90 points at 1.2505.  Although not much, the contract has now closed down six days in a row.  Today’s low is less than 100 higher than the all time contract low from  July 7 of 1.2365. Open Brazilian Report.

September tried to go higher after touching the low, but the push could not be sustained.  We are now threatening to break through the low.  If that occurs, there could be many sell stops that could increase the rate of decent.  To where??  Anybody’s guess!

With a continued strong dollar and weak Brazilian Real and a good current harvest, prices could be under pressure to continue the decent.  As always the market could correct itself upwards tomorrow and then begin the decent again.