to make mini contracts in coffee sugar cocoa a few months ago oh well ... I am not going to open up an account elsewhere to trade the big one with the jokers in the pit who just cant wait to see my market order
Seth, I've been obcessing over coffee for months now. There are weird divergences going on in coffee on the monthly charts. I was thinking about buying some calls and then having the calls excersized if they hit me and blow through to expiration. If the USD gets reamed for much longer, some of these other South American currencies will go screaming, driving up the price of coffee.
Report says that the Funds are out of their big short position of 977 contracts, now down to 102. This is what has spurred the market higher, being called +1.50 on the opening, and coming in +2.20 The thinking is . . . is that the Funds have reduced their short-position and are now looking to get long, perhaps. No fundamental reason for the surge, at this point.
That's where you are incorrect. There IS A FUNDAMENTAL REASON for going long coffee. The US Dollar is pooping on itself, and demand is increasing world wide for commodities. I really love Coffee and Timber. Waggie, do you trade financial futures and stocks, or do you trade commodities and softs, or do you do everything? I'm at the point of giving up on this totally messed up stock market, and trading the commodities bull. At least in commodities, I'm investing in something that is real, and not something like the Russell 2000 that has no earnings. That is my thinking.
There is no FUNDAMENTAL reason to buy Coffee here, hence the TRADE won't buy at these levels, and thus it is up to the FUNDS. There was talk on the floor of a large number of 70.00 options being exercised in response to an advance reading of the Committment of Traders data showing a sharp decline in the FUND net short position. Funds were to have neutralized their net position as of last week, so this can be considered a bit bullish. Coffee is working out of a 15-month CONSOLDIDATION between 56.00 and 71.00 - - - If one really believed that they weaker dollar as very bullish for Coffee, this chart would have broken out to the upside a long, long time ago. Again, there are no fundamentals regarding the size or quality of the Brazilian crop thus far. Stay tuned.
THERE IS A FUNDAMENTAL REASON. COFFEE IS IN A GIGANTIC OVERSUPPLY, THUS THE PRICE IS REALLY LOW!!!! THUS, NOW IS THE TIME TO BUY!!!! Also, there are technical reasons and Divergence reasons. Look at a monthly chart on coffee and add an RSI or MACD. BULLISH DIVERGENCE SCREAMING AT US. Also, in regards to the US Dolllar play not having an affect, just look at Natural Gas, it took a long time for it to come out of its shell. It was trading $4.60, and the whole world was bearish, and I was screaming from the hills to go long because the USD was dying. THERE WAS NO FUNDAMENTAL REASON TO BUY???? Of course there was a fundamental reason, we shot up to like $7.60 in 5 days. It was a crazy move, and nobody, except me apprently understood why it was happening.
Coffee has some signs of a possible drought situation - without normal rainfall in Brazil's growing regions soon, you will get a smaller crop in spring and the price will spike up. Look at the options premiums - there is a huge skew with OTM calls trading at far higher prices than equivalently OTM puts. Also as mentioned previously, the price has been low for a long time, reducing the incentives to supply. Brazilian growers are finally moving coffee growing areas over to other crops, which is positive for the long-term price outlook. Add in increased demand due to USD weakness and a recovery in the US, far east and Latam economies, and there is potential for a move higher IMO. However, I would prefer to see cash coffee prices have a sustained break out of their consolidation - the resistance high is around 205 Brazilian Reals. That will mark the potential beginning of a new bull market IMO.
I haven't traded coffee for about two years, so I just pulled up the charts to see what you're talking about. I would short coffee here, covering around 65 (March contract).