Month: November 2015

This week, my coffee stock reached an all-time low when it plummeted to -81 percent.
I was feeling rather confident that the market would bounce back, however, this never occurred. This continued decline was perpetuated by Colombia’s continued release of low(er) grade beans onto global markets which increased supply and greatly lowered the price.

While I do still believe that my stock will increase and reach positive values, it will not happen within the lifespan of this class. In any event, I have learned a great deal about futures market variability. Moreover, since studying for Jim’s exam, I feel that my knowledge of futures and offsetting risk has been strengthened and I look forward to attempting this once more with my new found knowledge.

In the meantime, I will drown my sorrows with a High-Grade, Brazilian, Americano Misto.

Aaron

Last week, I spoke of how my stock portfolio was dire. Unfortunately, not much has changed since. Coffee futures have continued to climb and fall, although the descent has dominated the trend.

This overarching downward trend has been fueled by Colombia’s continued release of beans on to global markets as well as relenting fears concerning this year’s Brazilian coffee harvest. The main Brazilian producing state, Minas Gerais, has had problems with flowering this season. Consequently, large quantities of this year’s first harvest are expected not to produce cherries due to the dryness. This will reduce the yield as these Arabica crops are known to flower and produce two harvests with the first yield always considerably larger than the second. While this scenario was meant to cause fear and increase futures prices, many professionals noted that a reduced coffee supply, even by several million bags will not have a large impact.

Things may get better for me, worse for coffee…

A few news sources, namely Agrimoney have written about the deteriorating situation of coffee plants in Brazil due to dryness. Although this year is part of the El Nino period and heavy rains were, and still are expected, this lack of rain is certainly raising fear.

Finally, coffee futures have been predicted to rise again sharply by the end of 2016 with some speculating 170 cents a pound. Let’s see what happens!