Coffee Traders' Forum - A Discussion about Coffee Futures Trading
Coffee Traders Discussion Forum
Good analysis. No ax to grind on this end. To me, the future direction of NY KC can't be analyzed because it is hugely dependent upon upcoming weather and the related impact on Brazil's 18-19 crop. Not 17-18, but 18-19.
Inventories have not really been liquidated, but rather transferred to the intermediary level.
Best to trade the market technically. To me, a negative read at the moment. I also view the combined COT as bearish.
It may not happen, but the coffee market will have a very difficult time digesting 60 million bags from Brazil and 30 million from Nam. The continued talk about demand re consumption is not valid to me. Other than the switch to single servings, which definitely dented consumption, and the decline in daily consumption due to the aging population, coffee consumption marches slowly higher. There is no consumption related spike to drive prices higher. Inventory management is another animal.
The record soft complex short fund position (futures & options) of -183,200 contracts for the week ending 7/11 declined by 103,000 during the last four weeks and is now -79,832. OJ not included.
The NY KC record fund short position of -43,620 for the week ending 6/27 declined by 43,000 over six weeks and that leaves the funds basically flat. The open interest also dropped during that time period, not a bullish dynamic.
The record short fund cocoa position of - 52,344 for the week ending 7/18 declined by 25,374 over the last three weeks.
The record short fund sugar position of -113,434 for the week ending 6/27 declined by 32,242 over the last five weeks before increasing 4,431 during the last reporting periods.
After declining for five weeks, the long fund cotton position increased by 16,623 over the last three weeks.
As of 8/8, the funds were net long 33,986 contracts of cotton and short 26,970 in cocoa, short 1,225 in coffee and short 85,623 in sugar.
The weekly decrease in the fund short complex position over the last four weeks was, 6,658, 28,262, 45,030 and 23,418 for the week ending 8/8.
Re the last two paragraphs above, note that the first one reflects the fund position as of 8/8 and the second one reflects the weekly change in that short position over the last four weeks.
If we trade with a signals based technical bias, we can side step this mind numbing analysis. Best to remember that perception is reality in the short term and emotion is a fundamental. From a seasonal standpoint, coffee has a distinct upward bias until mid-September. It is also worth noting the the world's greatest fundamental analysis is no longer valid when a new and meaningful dynamic, known or unknown, enters the arena. Another validation for technical trading.