{"id":651,"date":"2019-06-04T12:17:06","date_gmt":"2019-06-04T15:17:06","guid":{"rendered":"https:\/\/comexim.com.br\/?p=651"},"modified":"2019-06-04T12:17:08","modified_gmt":"2019-06-04T15:17:08","slug":"coffee-soars-more-than-11-in-five-sessions","status":"publish","type":"post","link":"https:\/\/comexim.com.br\/en\/coffee-soars-more-than-11-in-five-sessions\/","title":{"rendered":"Coffee soars more than 11% in five sessions"},"content":{"rendered":"\n
<\/i><\/span>Back<\/span><\/a><\/div>\n\n\n\n\n

COFFEE SOARS MORE THAN 11% IN FIVE SESSIONS<\/a><\/h2>\n\n\n\n

At\nthe last week of May, a short one in the United States due to special Memorial\nDay holiday that also unofficially marks the beginning of the summer, investors\ndecided to sell stocks taking down major US indices, as well as in Europe and\nAsia \u2013 sell May and go away?<\/p>\n\n\n\n

The\ndollar index on Friday gave back most of the gains recently accrued as a result\nof a renewed bet that the FED will cut interest rates soon, based on the risks\nof a global slowdown brought on by the trade war with China.<\/p>\n\n\n\n

The\nCRB sank to levels that we last saw at the beginning of January, driven by\ncontinued decline in energy commodities and industrial metals, while among the\nwinners ICE Arabica coffee led with 11.2% gains in five sessions, followed by\nseveral agricultural commodities \u2013 not with the same magnitude.<\/p>\n\n\n\n

Robusta\nstayed a little behind, making the arbitrage to wider to US$ 36 cents per\npound.<\/p>\n\n\n\n

Fundamental Focus<\/h4>\n\n\n\n

The\nrally could not come at a better time for many participants, the roasters,\nafter several have been buying the futures for some time, the merchants, given\ntheir need to cover part of their sales and to producers, helping those in\nBrazil to sell coffee above R$ 400.00 again (far from ideal for them, but\nbetter than the recent R$ 360.00) at the moment where the need for money is\ngreater = the harvest.<\/p>\n\n\n\n

Flow\nof businesses increased internally in Brazilian and in other origins many have\nreported more offers showing up. Price fixation that was being held back, on\nconsignment contracts, were also mentioned, and volumes traded in the exchanges\nsoared.<\/p>\n\n\n\n

Replacement\ngot slightly better, but merchants have been more focused on covering their\nexposures waiting for their buying needs to get satisfied to, then, eventually\nlook on improving the FOB basis \u2013 which in my opinion will only happen if NY\ncan make new legs to the upside.<\/p>\n\n\n\n

Many\nBrazilians are reasoning the gains on the lower yields coming out of the farms\nand lower quality, impaired by rainfall and the uneven maturity of cherries.<\/p>\n\n\n\n

If\nwe consider a scenario where the US dollar depreciated sharply, the Real strengthened\nmore than the other emerging currencies and the funds have been liquidating\ntheir shorts (not adding to their long position), I find it difficult to credit\nthe rally only to quality and yield issues.<\/p>\n\n\n\n

One\nwould notice a general discomfort to bet in much lower prices, as they are low\nhistorically speaking, but on the other hand the perception remains that we\nhave enough supply to go through this year of deficit, making very few\nencouraged to be even more aggressively loading on the buy-side too far out the\ncurve, given the burden on more than 15% to elongate positions \u2013 and the\npotential for a record harvest in Brazil in 20\/21.<\/p>\n\n\n\n

At\nthe Coffee Dinner in S\u00e3o Paulo, last week, everyone was happy with the recent\ngains of the board and hoping that not only it could sustain, but that the\ngains could be further extended. <\/p>\n\n\n\n

The\nbeginning of the Brazilian winter and the behavior of traders that have been\nselling every rally (which did not work on Friday, forcing short-term guys to\nrush and cover their shorts after the \u201cC\u201d failed to sink in the last half of\nthe session) shall keep volatility high \u2013 somehow welcomed for prop desks after\nseveral months of a boredom market.<\/p>\n\n\n\n

Since\nthe rally began two weeks ago with frost fears triggering then technical\nstop-losses that brought managed-money to diminish their exposure, we have to\nthink if fundamentals have changed to justify a trend-change, of if eventually\nthe market was just wrong going ahead of itself to \u201cpre-sell\u201d a record 20\/21\nBrazilian crop and a carry-over that has been getting bigger \u2013 maybe suggesting\na higher 18\/19 crop.<\/p>\n\n\n\n

At\nleast it will get a lot more interesting from here.<\/p>\n\n\n\n

Technical\nFocus<\/h4>\n\n\n\n

As\nlong as ICE arabica July contract respects US$ 99.50 cents per pound bulls\nmight still have stamina in trying to take prices to the 200-day moving average\nat 107.20 (fyi: second-month continuous chart shows the 200-day moving average\nat 103.90). London first support level is 1267 and resistance at 1407.<\/p>\n\n\n\n

I\nam looking forward to seeing some of you in Berlin at the World of Coffee \u2013\nfeel free to text me or call if you have some spare time.<\/p>\n\n\n\n

Wishing\nyou a nice week,<\/p>\n\n\n\n

Rodrigo Costa<\/em><\/strong><\/p>\n\n\n\n

Skype:\nrodrigoccosta10<\/p>\n\n\n\n

WhatsApp:\n+1 646 468 7091<\/p>\n","protected":false},"excerpt":{"rendered":"

COFFEE SOARS MORE THAN 11% IN FIVE SESSIONS At the last week of May, a short one in the United States due to special Memorial Day [\u2026]<\/span><\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"inline_featured_image":false,"footnotes":""},"categories":[16],"tags":[],"class_list":["post-651","post","type-post","status-publish","format-standard","hentry","category-commentary"],"_links":{"self":[{"href":"https:\/\/comexim.com.br\/en\/wp-json\/wp\/v2\/posts\/651","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/comexim.com.br\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/comexim.com.br\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/comexim.com.br\/en\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/comexim.com.br\/en\/wp-json\/wp\/v2\/comments?post=651"}],"version-history":[{"count":1,"href":"https:\/\/comexim.com.br\/en\/wp-json\/wp\/v2\/posts\/651\/revisions"}],"predecessor-version":[{"id":652,"href":"https:\/\/comexim.com.br\/en\/wp-json\/wp\/v2\/posts\/651\/revisions\/652"}],"wp:attachment":[{"href":"https:\/\/comexim.com.br\/en\/wp-json\/wp\/v2\/media?parent=651"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/comexim.com.br\/en\/wp-json\/wp\/v2\/categories?post=651"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/comexim.com.br\/en\/wp-json\/wp\/v2\/tags?post=651"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}