Coffee Traders' Forum - A Discussion about Coffee Futures Trading
Coffee Traders Discussion Forum
You once said that we should look at commercials as net and everyone else as gross. That has always been my belief as well. But when trying to understand what the commercials are doing we need to consider their delta position. Sure, some commercials are buying forward to meet their consumer needs and some origin selling is going on in the forwards as well. But the bigger composition of the commercial activity is options. Commercials, based on the latest COT, are 43,057 delta long. Delta represents actual lots as you know. If the market were to rally, delta requirements would diminish, and so they sell. 43k lots is a lot of ammo. I truly agree with your take on the weather. Its consequences however, both to the crop and to prices, are to be seen.