Arabica Coffee Futures. The Canary in the Coal MineWith nearly 60 percent up path performance in 2024, Arabica coffee futures rose above $3.00 a pound, the highest mark since May 2011, as traders assess potential problems with next year’s crop in top producer - Brazil.
Despite recent rains, soil moisture levels remain low, leading to limited fruit development and excessive leaf growth, local traders said.
U.S. and European coffee lovers are getting ready to tighten their belts as natural disasters have hit the world’s two largest coffee-producing countries, causing commodity prices to more than double in the past five years.
Droughts in Brazil, the world’s largest coffee producer, and severe typhoons in Vietnam, the second-largest producer, have severely disrupted the global coffee supply chain, driving up production costs that are increasingly being passed on to consumers.
In addition, there are reports that Brazilian coffee farmers are holding back shipments of coffee to the market in hopes of higher prices, leading to further shortages, tighter supplies of coffee on the spot market, and higher prices.
Coffee is literally the “Canary in the coal mine,” signaling climate change, the ecological crisis, and its impact on agriculture.
The idiom originated within the Industrial Revolution in England (back to late XVIII century), when coal miners, lacking modern gas-monitoring equipment, would take canaries (birds) into the coal mine with them. And when dangerous gases like carbon monoxide (which is odorless) accumulated in excess in the mine, they stopped the birds chirping and killed the canaries before killing the miners, thus providing a warning to leave the tunnels immediately.
As some of the world’s largest coffee-consuming regions, coffee lovers in the United States and Europe will find the price hikes particularly hard to stomach.
According to German consumer data company Statista, Europeans consume about 3.2 million tons of coffee a year, accounting for nearly 33 percent of the world’s total coffee consumption, while Americans drink 400 million cups of coffee daily (which equates to 146 billion cups of coffee consumed in the United States each year, or nearly four cups a day for every American adult).
In fact, coffee is more than just a morning ritual in the United States; it has become a cultural and business driver.
But understanding the depth of America’s love affair with coffee may be as complex as the drink itself, and of course, more complex than the current coffee prices.
Natural disasters have taken a heavy toll.
Brazil, which accounts for about 40% of the world’s coffee production, is battling one of its worst droughts in decades. Dry conditions have severely impacted Arabica-growing regions, reducing yields.
The 2023–24 crop cycle is already seeing a sharp drop in production, with some estimates suggesting output could fall by as much as a fifth (20%).
The impact is being felt most acutely in Minas Gerais, Brazil’s largest coffee-producing state and home to high-quality Arabica, which has seen months of lower-than-normal rainfall.
Brazil’s farmers are battling the country’s worst drought in seven decades and above-average temperatures.
While Brazil dominates the Arabica market, Vietnam is the world’s leading producer of the cheaper Robusta beans used in instant coffee. Earlier this fall, Typhoon Yagi devastated the country’s main coffee-growing regions in the Central Highlands, killing at least 60 people and injuring hundreds more.
Thousands of hectares of coffee plantations were estimated to have been damaged, leading to significant losses in both the current crop and future production potential, as the damaged trees will take years to recover.
A perfect storm of environmental concerns has driven prices to all-time highs, above US$3.00 per pound of coffee beans.
The combined impact of drought in Brazil and the typhoon in Vietnam has sent global coffee prices soaring. The International Coffee Organization (ICO), an intergovernmental body made up of coffee-exporting and -importing countries, reported that prices rose nearly 20% in the third quarter of 2024, reaching their highest level in nearly a decade.
The ongoing effects of climate change make a quick return to stability difficult. The sector remains vulnerable to extreme weather conditions, which could further disrupt future harvests. In addition, growing global demand, particularly in emerging markets such as Asia, could continue to put upward pressure on prices, further slowing recovery efforts.
As the world’s two largest coffee producers struggle to recover from the crisis, the outlook for the global coffee market remains uncertain.
Climate change is reducing the area of land suitable for growing coffee crops, and extreme weather events are becoming more frequent, creating a range of challenges for the sector and coffee drinkers in the US and Europe.
In technical terms, the main 12-month graph of coffee prices indicates another buyers attempt to storm the round, 250-cent mark.
Since the price is near to consolidate by the end of the year above this round number, it can contribute to a further rally and multiple price growth in the foreseeable future.
Coffee_analysis
The Enigma of Robusta: Why is Coffee's Unsung Hero So Valuable?Robusta coffee, a resilient and versatile bean, has played a pivotal role in the global coffee market. Despite its often overlooked status, Robusta has experienced a significant surge in value in recent years. This article explores the factors driving the rising prices of Robusta coffee, including increased demand, supply chain disruptions, and climate change. By understanding the challenges and opportunities facing Robusta, we can better appreciate its enduring significance in the global coffee industry.
Introduction
The global coffee market has witnessed a steady rise in demand, leading to a corresponding increase in prices for both Arabica and Robusta beans. While Arabica often takes center stage, Robusta, a less celebrated but equally essential bean, has also experienced a notable appreciation in value. This article delves into the reasons behind Robusta's ascent, examining the factors that have contributed to its growing prominence.
Factors Driving Robusta Coffee Prices
Several key factors have converged to push Robusta coffee prices upward:
Increased Demand: The global appetite for coffee has expanded significantly, particularly in emerging markets. This rising demand, coupled with a limited supply, has created upward pressure on prices.
Supply Chain Disruptions: Weather-related challenges, geopolitical tensions, and logistical constraints have disrupted supply chains, leading to shortages and higher costs.
Climate Change: Climate change has exacerbated weather-related events, such as droughts and floods, impacting coffee production and driving up prices.
Shifting Cultivation Patterns: Some farmers have shifted their focus to more profitable crops, reducing the overall supply of Robusta coffee.
The Enduring Value of Robusta
Despite the challenges it faces, Robusta Coffee continues to hold significant value. Its resilience, versatility, and unique flavor profile make it a sought-after commodity. As a cornerstone of the global coffee market, Robusta plays a crucial role in meeting consumer demand and supporting the livelihoods of millions of farmers.
Conclusion
The rising prices of Robusta coffee can be attributed to a combination of factors, including increased demand, supply chain disruptions, and climate change. While the future of coffee production faces challenges, Robusta's enduring value and adaptability position it as a resilient force in the global coffee market. By understanding the factors driving price increases and exploring innovative solutions, we can ensure the continued sustainability and enjoyment of this beloved beverage.
Coffee - Is price going to drop from supply zone of feb 2022???Hey traders coffee is at highs of feb 2022, it does tend to drop in August to September time, and now were at this high commercials are selling coffee and id rather be on there side than retailers who are still buying.
So I am going to sell....
Please like comment and follow cheers
This chart material is for education purposes only / Demo account should be traded only
Not So Little Brother ? NYSE:BROS +3.85%on 05/06/24 is a powerful contender for Starbucks customers. Living in southern California, I've started seeing DutchBros popping up around town (are they any good?). One thing for sure they've gotten right is their amplified focus on delivering the best customer experience. One thing that the NASDAQ:SBUX Starbucks former CEO Howard Schultz asked his former company to refocus on. It's so good that Tiktokers started making videos poking fun at the friendly nature of the Dutchbros employees.
With all of that being said, it's working for them and very well. They've opened 159 new shops in 2023, and according to Placer.AI, "While the growth of Starbucks' foot traffic has been shrinking since last year, Dutch Bros' growth in traffic has been accelerating." also, Earnest Analytics reports, Dutch Bros. accounted for 6% of U.S. consumer spending on coffee and other premium drinks. Up from 4% at the end of 2020. Last year's revenue was up about 31%
This is my Strategy:
Using Bollinger Bands and Fibonacci Retracement, we see increased trade volume and volatility as the price rises above the SMA and towards the upper band. The price is currently $28.34. We can expect it to reach a price target of $31.16 (test strategy here) before retracement or reversal, as the shares may be near overbought status.
This will give us a $2.82 profit per share. If sold
Enter at price targets: $27.33 (low) and $29.92 (max)
Hold for the price to cross $32.90 for uptrend confirmation.
(FYI, analyst target maintains $33.00/share)
It is one of my favorite stocks, and I'll watch its performance closely this year.
Something Brewing?
NASDAQ:SBUX Has had a tough week (dropping -17.7%), topped with a demand from the former CEO Howard Schultz to shift focus from the current data-driven business model to a customer-centric business.
With the above being said, I believe the coffee giant will recover amid rising competition from Dtchbros $NYSE: BROS and Dunkin Donuts $FINRA: DNKN_SHORT_VOLUME.
This is my strategy:
Using Bollinger Bands and Fibonacci Retracement, we see a large trade volume and volatility increase as the price drops below the SMA and lower band. The price is currently $73.11. We can expect it to reach a price target of $84.68 (test strategy here) before retracement or reversal, as the shares may be near overbought status.
This will give us a nice $11.50 profit per share.
Enter at price targets: $70.31 and $72.92
Hold for the price to cross $87.46 for uptrend confirmation.
US Coffee - Clear Buy with S/L 186; Big move aheadEntry Level: $190
Stop Loss: $186
Target: $195-$199.00
Analysis:
The current entry level for initiating a short-term long position in US Coffee stands at $190. A prudent risk management strategy suggests setting a stop loss at $186 to mitigate potential losses in case of adverse price movements.
The target range for this long position is set between $195 and $199.00. This target zone reflects the anticipated price movement based on technical analysis indicators and market dynamics.
Traders should closely monitor price action and key support/resistance levels to assess the validity of this trading opportunity and adjust their positions accordingly.
Coffee completes wave 1The coffee futures were spotted completing a five-wave advance beginning in Oct.2023 and ending in Nov.
The coffee price is now in a wave 2 corrective phase. The 158 and 155 levels shall be the crucial support levels going forward since they are the 50% and 61.8% retracement levels of the wave 1 rise respectively.
The 3rd wave price target is projected around the 190 zone.
Note*- This post is for educational purpose only
Robusta hit the target after 2 years at $28.00I don't know about you but I prefer Arabica Coffee to Robusta.
It's sweeter, it's fuller and it's not that bitter.
Anyways, I sent out this trade idea in September 2021!
The price broke above the Falling Wedge and there were strong signs of upside.
This trade idea was a slow pace and anyone who held onto this trade, most likely would have made very little money due to the daily interest expense charges.
It really does add up. And unfortunately, we traders can't treat these markets like medium to long term investors who deal with derivatives.
Anyways, the target hit at $28.00 and the price looks to be consolidating here before further upside. Hopefully, a new pattern forms and we can get wired back into the trade.
INTERESTING FACTS ABOUT THE ROBUSTA COFFEE COMMODITY
Second Most Traded Coffee:
Robusta is the second most traded type of coffee, following Arabica, in terms of global market demand and trade activity.
Price Determination:
Robusta coffee prices are influenced by factors such as weather conditions, crop yields, global supply and demand dynamics, currency exchange rates, and geopolitical events.
Use in Blends:
Robusta coffee is often used in coffee blends, alongside Arabica, to provide a stronger and more full-bodied flavor profile.
Coffee Exporter Revenue:
Robusta coffee exports contribute to the revenue of major coffee-producing countries such as Vietnam, Brazil, Indonesia, and Uganda, driving economic activity and foreign exchange earnings.
Coffee Short - Seasonal weakness starting For my coffee drinkers - Both Arabica and Robusta had a strong start to the year. However, seasonally a bearish phase starts from 22 Feb to 31 Mar. The technical price target was also reached yesterday. In the last 17 years we can observe a negative trend between 22 Feb to 1 Mar. Only in 5 out of 17 years did the coffee price rise during this period. On average, coffee loses around -3.75% in this period with a standard deviation of 6.92%.
Coffee price keeps the negativity – AnalysisCoffee price provided more negative closings by consolidating below 178.00 resistance, to start reacting to the major indicators by declining towards 159.40, expecting to continue forming negative crawl and attempt to touch 154.00, while breaking this obstacle will extend trades towards 147.10 to face the historical support that appears on the chart, assuring the importance of monitoring its behavior to manage to detect the next main trend.
#COFEE- SHORT OPPORTUNITYIn anticipation of the recession, coffe begins to lose value as smart money is moved from these commodities to safer places.
Meanwhile, an upward breakout was attempted on the descending pattern, but the deviation was apparently a fake-out, which means that we will soon have a retest of the support and if it is broken, we can go on short until the next . support.
KC !! Wait to what will happen in the next DaysKC was on a long-range since December 2021 after a massive uptrend.
the break of the range may give an essential signal to position long on Coffee.
if the market breaks down, it could be a significant signal to go short and expect a target 0.5 Fibonacci retracement (162.30$)
coffee idea (29/08/2022)coffee
We expect the rise to continue to complete wave 3 of wave (5). We expect it to continue to 1.618, targeting 248.55. we expect not to break the support point at 209.45, which is the bottom of wave 2. Currently, we expect a correction in wave ((iv)) before completing the rise.
NQCIKCTR $NQCIKCTR Initial Short NQCIKCTR $NQCIKCTR Initial Short. SL and TP on chart. Move SL on TP.
What’s brewing with coffee futures?Like most commodities, London coffee futures saw a massive price uptrend in 2021. However, since the beginning of 2022, it's finally cooled off to an eight and half month low. As a silver lining, perhaps more interesting price action is currently heading our way.
With a very sharp fall during the last two weeks of February it's since consolidated, trading between $2,000 and $2,200 per metric tonne. As of writing, London robusta coffee futures (LRC) are trading at $2,099 per metric tonne.
For London coffee futures, May is typically a ranging month with price starting to pick up towards the second half of June. More often than not, highs of the year are made during the June and July months. However, seasonal trends will be butting up against the possibility that coffee prices are still overextended from 2021’s price hike.
Where could coffee prices reasonably head?
Looking at the daily chart with the Awesome Oscillator indicator, we can see some slight divergence. In spite of its undescriptive name, the Awesome Oscillator details trends and shifts in momentum. On the chart above, can see that the indicator is showing signs of a shifting momentum since the first week of March. With price consolidating, the indicator has slowly crept back up to its zero line, failing to keep correlation to the actual price and trend of the price chart. This could be a suggestion that price may make its way towards June and July highs. If so, the bigger question is if it will actually create the yearly high as well before making its way back down.
In respect to fundamentals, it has been noted that Brazil is currently harvesting a record setting yield of robusta coffee beans. However, the risk of frost hitting Brazil’s crop might not have been priced into its current trading price.
Start trading coffee futures with live and demo accounts today
Up, up and away!The coffee futures have broken today the bullish flag, and this derivate on coffee follows the coffee price accordingly. Maybe in the following days, a pullback is possible, reaching 3,71 or the vicinity of the broken trendline below.
According to the seasonality and inflation, I expect a general bullish trend in coffee until the end of the year. But buying this instrument and holding it until the end of the year could be difficult because of the volatility decay. Take care!
Technical Outlook for the Coffee Market, backed by fundamentals.Fundamentals: The coffee Market has been in a strong bullish trend ever since a frost hit the brazil coffee belt in July / August 2021, followed by a period of drought. This left the world´s biggest producer of Arabica coffee with huge productivity losses for the 2021/2022 crop. That results in a really tight Arabica balance sheet for 2022, which could get worse through re-openings of coffee-to-go shops after Covid-19 lockdowns. The tense global logistic situation with low vessel space, exploding freight rates and shortage of containers and truckers is fuel to the already burning fire of less coffee supply than demand.
What can be examined from this is, that roasters tap into certified coffee inventories drowning them to 10-year lows, an extremely bullish factor ever since.
Technicals: Prices stay in an uptrend channel, that can be divided into a major channel and two minor ones. The structure stayed between those two lines while completing several Elliott-Waves. After a new ABC correction from the 160,00 cts high, prices could start a new 5-Wave up to test the upper line of the major channel at ~175,50 cts. The certified inventories sliding below the magical number of 1 million bags would support this move.
Certified Coffee Inventory
bilderupload.org
Chart