These three words, “Coffee Market Soars” are what we hate to hear. There is no rational reason the market should be this high which to date is $1.93. This is very significant because $2.00 is a magic number in the coffee market.
Turning A Corner At $1.60
It is worth noting that in the history of the coffee market there was only ONE time when the market closed above $1.60 – that it did not CONTINUE its climb to over $2.00, $2.60 and of course $3.10 recently. That one time was in 2007 during drought fears in Brazil. Who will short this market now? The answer is nobody.
As long as the funds with their big money, as well as the average joe investor continue playing with options the market will remain in bull territory. The market is like riding on a bull and holding on for dear life. Bottom line: if there is drought damage in Brazil and say maybe 10% is lost, the market can take it. What it CAN’T take is the piling on of the funds. I firmly believe that this market has already priced in the Brazil damage. The rest is up to the guys who have no idea what coffee is.
Hold On & Hang In There.
For now we hold on and look to raise prices if this continues—we dollar cost average up and dollar cost on the way down. Remember one thing, and that is the coffee market is the most volatile of the publicly traded commodities, and for now it’s rearing its ugly head. Hold on, hang in there and take a deep breath. We will make it through.
Yours In Coffee,
Andrew
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