Coffee Traders' Forum - A Discussion about Coffee Futures Trading


Coffee Traders Discussion Forum

Coffee Traders' Forum

Market + Imports/Exports *PIC*

Good selling at the bell brought the market down from unchanged to 137.50. Since then attempts to rally have been timid and have been met with additional selling. The market is now quiet with little direction. After today, option expiration, we may get a better picture of where the market is heading, but for now expiration and the roll are dominating the market. The question is how do the systems stand? Are they still buyers or have they reversed to selling? We will see at 8:00 or so. The depth of market is thin and balanced on both sides. The arb in Sep is 42.80 after having closed at around 44.50 yesterday indicating a weaker KC. NovJan is lower at 14 premium. BRL is 3.1753 and COP is 2990.40. Bond futures are quiet but steady, metals are steady, except for copper, as equities are lower again. Oil is lower, sugar and cotton are slightly higher while cocoa is lower.

Imports/Exports

The question of increased imports in consuming countries to me has always signified an anticipated increase in consumption in a particular country. I ask myself why would roasters/merchants/distributors import coffee that they don't need. Of course this is my opinion and subject to dispute. Low exports can be easily be attributed low availability. But then there are some who would claim that low exports could mean low demand. Then it would follow that high exports mean high demand. I prefer to believe that low exports from producing countries equates to low availability. As to the impact on prices, according to our friend KahawaKevin "Low exports certainly represent low availability in origin, but the market generally anticipates that (due to frost/drought/other issues). Export levels to me are a trailing indicator, as the market has already seen signs well ahead of time."

The fact is that that import levels are also a trailing indicator reflecting market activity that has already taken place. In my assertion about consuming countries, I could have easily said that the recent strength that we have seen could be attributed to increased imports, but I would not dare say or even believe that. Anyone that tries to predict market direction on either imports or exports is stretching a bit. The fact is in both imports and exports one can go either way so it's best to resort to our resident experts Jack, Sean or Kevin on such issues.