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.
Coffee
Coffee [14Dec2021]Follow up to he coffee trade from yesterday. I don't still know why coffee is so bullish compared to other soft commodities. But let's not search for reasons. I bought some coffee yesterday and today it is still bullish. We might see a jump to the top end of the range since volatility of volatility is rising.
PS. If you followed my plan yesterday, I'd suggest to sell some and bag some profit.
Goodluck
Redd
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
WATCHING $SBUX for entry at 101.16WATCHING $SBUX for entry at 101.16
——————
I am not your financial advisor, but I will happily answer questions and analyze to the best of my ability but ultimately the risk is on you. Check out my ideas, but also do your own due diligence.
I am not a bull. I am not a bear. I just see what I see in the charts and I don’t pay too much attention to the noise in the news.
Very often you have to look at my charts from the perspective of where I’m looking to sell puts. But I also do open positions still once in a while.
If you want me to analyze any stock or ETF just leave me a comment and I’ll do it if I can.
Have fun, y’all!!
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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:
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2. Never trade without a confirmation
3. Never rely on signals, do your own analysis and research too
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The content on this analysis is subject to change at any time without notice, and is provided for the sole purpose of education only.
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LKNCY Repeating MA patternIt can be seen after the MA arrives and makes a small turn towards the upside, price immediately follows
This can be observed on the latest MA (yellow)
The price is within a Rising Wedge (a bearish pattern) but this observation of the MA's give me hope for a bull breakout, as can be seen with each MA in the past
Agriculture - SeasonalityBrief for Agriculture:
- Price inflation of commodities and tailwinds of seasonality will provide a bountiful harvest this year's end for agricultural commodities.
Focus points:
Coffee:
Oats:
Soybean:
Soymeal:
Cotton:
Most interested in Coffee and Oats, as they are showing strong trends entering into the bullish season, but eagerly awaiting Soybean and Soymeal reversals for a most opportune entry.
GLHF
- DPT
WATCHING $SBUX - Key Levels and Analysis WATCHING $SBUX - Key Levels and Analysis
Understaffed, higher cost of operations, higher cost off coffee, and unstocked shelves will likely chip away at revenue. I don’t normally look at fundamentals… I’m strictly technical. This is just what I am physically seeing every time I walk into a Starbucks.
Analysis is technical only, but it seems to be supported but what I’m seeing in real time.
Starbucks would be an excellent opportunity around 100.
——————
I am not your financial advisor, but I will happily answer questions and analyze to the best of my ability but ultimately the risk is on you. Check out my ideas, but also do your own due diligence.
If you want me to analyze any stock or ETF just leave me a comment and I’ll do it if I can.
Have fun, y’all!!
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( •_•)
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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?
COMMODITIES - RICE ZR1 - Breakout ImminentLine of Least Resistance determined by Underlying Conditions in my Global Macro Campaign.
Price Action Behavior suggests short attack taking advantage of sellers at previous breakout, to accumulate for next wave... which is building up quickly.
I will know if my suspicions are correct at the median line.
US-China tensions will make the supply scarce, and NATO + allies' free trade agreements are under pressure due to pandemic handling. I speculate a global shift towards domestic production, if not military tensions... Nations will most certainly need to stockpile food!
Other Commodities of interest:
Coffee:
Wheat:
Soybeans:
Corn:
GLHF
- DPT
Coffee Re-accumulation! Hello my beauties.
The chart of coffee suggests a violent bullish breakout of a multi-year downward trendline. The price will probably continue its uptrend, but it is now signalling the beginning of a phase of re-accumulation; the price has reacted strongly with a sudden move to the downside that has stunned the price sideways. I will wait for further development to make sure the schematics play out as expected. I will wait for the price to breach the range in red to the downside, only to quickly recover within the range itself; the successful retest of the bottom of the range would be my buy signal before the uptrend continuation.
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Luca, TrickleDownFX
COFFEE WK1: 100% Gains SWING setup BUY/HOLD(NEW)(SL/TP)Why get subbed to me on Tradingview?
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COFFEE WK2: 100% Gains SWING setup BUY/HOLD(NEW)(SL/TP)
IMPORTANT NOTE: speculative setup. do your own
due dill. use STOP LOSS. don't overleverage.
🔸 Summary and potential trade setup
::: COFFEE WK2 chart review
::: chart is LOG SCALE
::: setup still valid expecting
::: 100% gains final TP BULLS
::: global inflation driving prices
::: also global warming heavy impact
::: cycle high for the market is near
::: 300/320 USD BULLS control the market
::: 12/24 months as global economy
::: is starting the recovery right now
::: BULLISH CYCLE is ON BUY DIPS
::: BUY/HOLD get paid / swing trade setup
::: BUY ANY DIPS / final TP bulls is 175 USD/ bbl
::: 100% upside from current market price
::: WAIT for dips and reload (BULLS)
::: recommend to BUY/HOLD
::: recommended strategy: BUY/HOLD
::: bullish super cycle in coffee market
::: SWING trade setup do not expect
::: fast/miracle overnights gains here
::: good luck traders
🔸 Supply/Demand Zones
::: 100USD fresh demand zone
::: 300USD fresh supply zone
🔸 Other noteworthy technicals/fundies
::: TD9 /Combo update: N/A
::: Sentiment short-term: BULLS / MORE GAINS
::: Sentiment outlook mid-term: BULLS / SUPER CYCLE
RISK DISCLAIMER:
Trading Crypto, Futures , Forex, CFDs and Stocks involves a risk of loss.
Please consider carefully if such trading is appropriate for you.
Past performance is not indicative of future results.
Always limit your leverage and use tight stop loss.
Expect the price of your cup of coffee to increase. We have both technical and fundamental justifications as to why coffee is the next inflationary trade to jump into.
With supply chain issues and the seasonal changes in Brazil affecting coffee production and shipping, we can expect the value of the black breakfast gold to rise. Latin American coffee farmers are also reported to have gone on strike in the last few months to demand better prices for their produce as they are barely turning a profit.
Technical wise, the symmetrical triangle break shows us the fundamentals are playing out on the charts.
KC1! COFFEE FUTURES:FIBO PULLBACK WITH FUNDAMENTAL NEWS...Coffee prices on Thursday extended this week's rally. Coffee has moved higher this week despite concerns about coffee crops in Brazil. Weather has predicted above-average temperatures in the coming month for Brazil's coffee-growing regions, which could further stress Brazil's coffee plantations. Recent frost events in Brazil have damaged coffee trees. Surveys conducted by the government found that last month's frost events reached 194 municipalities and more than 80% were affected in some way. Control authorities said on August 3 he said sharp swings in temperatures over the past 30 days in Brazil have triggered severe defoliation of trees in coffee growing areas.
Nevertheless we can see how the chart is in a Situation of Pullback, with Volumes and Stochastic Indicator coming out of the Oversold area with divergence. The price has harmoniously rebounded on Fibonacci levels and our opinion sees the price of coffee rise also due to the possible decrease in stocks.
Do you think the cost of coffee will grow?
MARKET ALPHA - UNUSUAL OPTION ACTIVITYI am going to post some more ideas from our unusual options screener.
After seeing some of the plays uncovered here I think it would be awesome if more people could benefit from charts and ideas like this one.
For this post we are looking at Starbucks. We are seeing increasing call activity come in on the October 1st Contract at the 125 strike. Let's see how it plays out! Thanks for tradingview for allowing the feature where we can easily track the progress of ideas.
NASDAQ:SBUX
DBC commodity indexDBC commodity index, Commodity prices have stalled but should continue higher as mother nature continues to go haywire interfering with the growth of crops. with a lower yield and ever increasing demand producer prices must raise to accommodate for the hardships therefor that price increase should become reflected on the index price as well.
COFFEE:UPTREND|NEW BULLISH FIBO IMPULSE| LONG SETUP 🔔Welcome back Traders, Investors, and Community!
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TATA COFFEE PICK UP A NEW RALLY found a pullbbackNSE:TATACOFFEE buy above -210 or pivot level
stoploss -195
target-245
tata coffe is moving on upward trend and little pullback then pick up a new rally
as usual all of them says as, i am not a sebi registerd analysist. so before take a trade you can do your own analysis.
your openion about this script you comment the below
thank you dudes