I donít think that you can compare cotton to coffee. In cotton the new year crop is totally independent of the current crop. Jul20/Dec20 and Dec20/Jul21 are almost unrelated. This morning, July was higher and Dec was lower. JuanV has a great understanding of the cotton market and I wish he would add his comments.
But coffee is a different being altogether. In coffee, carryover stocks are very much a consideration. So we may expect a tight production, for example, but, if we have an abundance of stocks on hand, then the small production is not a big deal.
Also, comparing todayís market to 2004 is not advisable for several reasons. At that time there was no electronic trading. The personality of the market was different than today. Fundamentals were different. Volume was different. Investorsí participation was different. The factors that impact spreads are always changing and are often unpredictable. You can look at past behavior and compare it to the present, but itís not a situation where history repeats itself. Good Trading.
« Back to index