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Coffee causing a stir in commodity markets- Aneeka Gupta, Director, Macroeconomic Research, WisdomTree Coffee prices are trading at their highest level in 10 years and is the second-best performing commodity Year to date (Ytd)1. A combination of a production shortfall in Brazil (the world’s largest coffee producer) due to extreme weather conditions coupled with supply disruptions should continue to propel coffee prices higher in 2022. Lower inventory levels to keep prices vulnerable to supply shocks The coffee harvest has a biennial cycle. This implies that a crop year with a good harvest (the “on year”) will be followed by a crop year with a lower harvest (the “off-year”). The last crop in Brazil was disappointing not only because it was an off-year, but Brazil also faced unfavourable weather conditions resulting in weaker supply. This was evident from Companhia Nacional de Abastecimento’s (“CONAB”) latest estimate for Brazil’s 2021/22 coffee crop, which is down 25.7% over the prior year3. As a consequence of lower output, global ending inventories are expected to decline from 7.9mn bags to 32mn. The weaker forecast represents the lower availability of coffee for exports, following weather setbacks to the 2021 harvest and logistical bottlenecks. Further obstacles have emerged towards the latter half of 2021 in the form of elevated shipping costs and high fertilizer prices, which are also likely to lend a tailwind to coffee prices. According to the United States Department of Agriculture (USDA), Brazil’s coffee exports are expected to slump by 12.45mn bags over the prior year to 33.22mn bags in 2021/224. A decline of that level would represent the largest decline in volume terms by a distance and the sharpest fall in percentage terms at 27% since 1985/86. USDA has been citing more cases of “defaults”, where coffee farmers failed to deliver pre-agreed contracts on the physical market because of excessive hoarding of coffee beans amidst the steep rise in prices. USDA also expects global consumption to rise by 1.8 million bags to 165.0 million, with the largest gains in the European Union, the United States, and Brazil. Outlook for 2022/23 clouded in uncertainty While the Brazilian 2022/23 coffee crop will be an on year (of the biennial cycle), there is still plenty of uncertainty shrouding the outlook of the coffee crop. According to Fitch, the La Nina5 weather phenomenon could cause further problems for the upcoming crop. The arrival of the La Nina weather phenomenon, which tends to bring dryness in the southern part of South America for the second consecutive year, has also dampened the outlook for the coffee crop in the upcoming season. Conclusion The supply tightness on the physical market has also pushed the front end of the coffee futures curve into backwardation from contango, thereby yielding a positive roll yield of 0.2% versus -1.4% a month back. Coffee stocks in the International Continental Exchange’s (ICE) warehouses have declined further and currently find themselves at a 9-month low of 1.78mn bags. Net speculative positioning in coffee remains 1-standard deviation above the 5-year average underscoring the bullish sentiment towards coffee. While the recent rise of the Omicron variant could threaten demand as countries decide to restrain mobility, we believe the fast-spreading variant could also complicate supply-chain disruptions and potentially drive Arabica prices higher. Sources 1 Bloomberg, tracking commodity futures price from 31 December 2020 to 8 December 2021 2 Bloomberg Ticker - KCA Comdty, price performance from 31 December 2020 to 8 December 2021 3 Companhia Nacional de Abastecimento (Conab) – Brazil leading coffee forecasting agency 4 United States Department of Agriculture – Coffee: World Markets and Trade Report 5 La Niña is a complex weather pattern that occurs every few years, as a result of variations in ocean temperatures in the equatorial band of the Pacific This material is prepared by WisdomTree and its affiliates and is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The opinions expressed are as of the date of production and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources. As such, no warranty of accuracy or reliability is given and no responsibility arising in any other way for errors and omissions (including responsibility to any person by reason of negligence) is accepted by WisdomTree, nor any affiliate, nor any of their officers, employees or agents. Reliance upon information in this material is at the sole discretion of the reader. Past performance is not a reliable indicator of future performance.
ICEUS:KC1!
by aneekaguptaWTE
Coffee [13Dec2021]Yes, I track commodities too.. Comparing most of the commodities, almost all of them are bearish or slightly bearish. for example, Silver has been bearish for some time now and also gold has changed from bearish to slightly bearish today with creeping bullishness. but coffee is the only one showing such a strong a bullishness, so do I buy it? If the commodities are having a bad day except one, what does that imply? I don't know but I'm going to open a small long position at the low end of the range. If you have any idea why coffee might be bullish, please let me know below Redd
ICEUS:KC1!Long
by reddan256
4
Coffee Can Become Cheaper - Reaching Reversal FCP ZoneTraders, Coffee like other commodities has been on a huge run this year. But now it has reached a point of pause, correction and possibly reversal too. So coffee futures can fall down from the FCP zone. Wait for a confirmation as the market has been trending hard upwards. Rules: 1. Never trade too much 2. Never trade without a confirmation 3. Never rely on signals, do your own analysis and research too ✅ If you found this idea useful, hit the like button, subscribe and share it in other trading forums. ✅ Follow me for future ideas, trade set ups and the updates of this analysis ✅ Don't hesitate to share your ideas, comments, opinions and questions. Take care and trade well -Vik ____________________________________________________ 📌 DISCLAIMER The content on this analysis is subject to change at any time without notice, and is provided for the sole purpose of education only. Not a financial advice or signal. Please make your own independent investment decisions. ____________________________________________________
ICEUS:KC1!Short
by vikinsa
4
COFFEE UptrendHi Folks: A fellow trader asked my advise on Coffee, so I am sharing my view on this commodity. Ascending channel, resistance broken, all seems to be sending prices to previous highs, No positions opened, just sharing possible scenario on this pair without knowing much of the fundamentals related. Cheers ------------------------------------------------- Remember, if you liked this idea don't forget to click LIKE and FOLLOW . That will encourage me to continue charting for you.
ICEUS:KC1!Long
by VIP_Trading_Technologies
6
BULLISH ON US COFFEE (SYMMETRICAL TRIANGLE°B ullish clues: - General uptrend since October 2019 - Symmetrical triangle , and coffee price just perfectly rebound on the symmetrical triangle's support and the 50 EMA - Bullish Harami on the support - Hidden Bullish Divergence on the Relative Strength Index ( RSI ) - 50 Exponential Moving Average act as a support Fundamental news: (from Reuters) - Lower production in Brazil , driven partly by drought and frost, has helped to tighten arabica supplies ( - 25.7% ) according to Conab. Released yesterday (September 21, 2021). - Brazil's Cooxupe, the world's largest coffee co-op and the country's No.1 exporter, expects significant damage to the 2022 crop from frosts that hit fields in July. Released yesterday (September 21, 2021). Objectives: If the symmetrical triangle is confirmed, coffee could goes up to the level of $215.00 USD (highest point of the symmetrical triangle and resistance zone). MAYBE WAIT A PULLBACK AS A CONFIRMATION OF THE SYMMETRICAL TRIANGLE Feel free to share, comment and give your opinion if it is constructive ;) DISCLAIMER: This is not investment advice
ICEUS:KC1!Long
by ViclreTrade
2
Education: Three Day Trailing Stop Rule (3DTSR)ICEUS:KC1! I learned a handy tool used to manage risk under certain circumstances - the Three Day Trailing Stop Rule (3DTSR) In this example, I actually fade the 3DTSR, but being able to execute different styles of trading strategies reflects an understanding of them, while acknowledging that no system or strategy used in markets will be perfect. Three Day Trailing Stop Rule: There is one initial criteria for the 3DTSR to become active - Either Upon Pattern Breakout - to limit initial risk/add to position at lower relative risk OR Upon Reaching 70% of Target from Breakout as a Trailing Stop In an Uptrend, to exit a position using the 3DTSR Day 1 is the High Day, defined by a new price high - at this point, we are not aware of the setup Day 2 is the Setup Day, defined by a closing price (end of day) that is below the low of Day 1 - at this point, the trigger is active Day 3 is the Trigger Day, as the stop is placed below the low of Day 2 The 3DTSR can also be used as an entry strategy, as shown in the chart here. Day 1 = High Day Day 2 = Setup Day, where price closed below the low of Day 1 Instead of placing a stop below the low of day 2, here I fade the 3DTSR by ADDING to a long coffee position, and jamming the stop to below the low of Day 2 Day 3 = The low of Day 2, or the trigger, is never penetrated, and price opens a cent higher If using the Trigger as a stop, or below the low of Day 2, and using the Triangle shown to imply a measured target, this is a whopping 20 to 1 trade setup. Do you have any profitable trading systems or strategies?
ICEUS:KC1!Education
by jBTCkingaling
3