ROEMER——COFFEE
Coffee futures have rallied, mainly on the outside markets, but also, as we suggested two weeks ago, a seasonal that cash
prices go higher this time of the year, and since the main freeze season is over and the bearishness over no frost, was already built into the fall in prices (mainly June). Cash prices go higher in Brazil, but especially so when there is wet weather.
The current wet spellin N.Brazilis the wettest in several years and partly responsible for this rally. However, conditions should begin to improve and improved moisture may make for some good early season weather, come the first bloom in Brazil come October. Traders will pay much closer attention to the bloom period in Brazil come October-December.
Just like with cocoa, when some reports came out a few weeks ago on the “what if psychology” of El Nino and possibly
a stronger Harmattan wind, there are some traders trading the “psychology” of El Nino, which “sometimes” results
in heavy rains in Columbia and Venezuela and drought in Indonesia. Right now, however, this is all just speculation.
So bottom line, from a weather standpoint only, if we had consistent heavy rains for the next week or two continuing in
N. Brazil, this could have more bullish an impetus. Right now, I am not sure there is much weather in the market other
than some “psychology” of a What If–El Nino situation.
Finally, a cold N. Hemp winter could increase demand for coffee…so you have mixed weather signals once again
with respect to this market until we get closer to fall and winter.
Roemer