Judith Ganes wrote few days ago:"... I donít see this as necessarily proof positive that demand is strong" Many people like her think that is not related with demand. The tight situation of the ICE coffee stock is seen purely as an isolated fact. Finally they concluded there is coffee everywhere and there is not any shortage.
I m just tired to hear the same story and that was telling even when prices were at 0.96 US cts/lb. Some fellows predicting prices will go under 90 cts , 80 cts or even 50 cts, however since then prices just were going, nothing but up. Now after the FND and having completed their Fibonnaci retracement they are ready to go up again.
About the steady coffee behaviour on this week, well I am surprised too, but just in some way. I was expecting this week our NY coffee C will retrace at least 3 to 6 cts because the FND and the September expiration day, last friday, when the calls had a high Open interest. But the market have been very steady. Funds are going long in all the deeps and the industry is also taking advantage fixing prices when the market recedes. That is a fact, it is not what I believe.
About the demand, the demand has been strong since March, just lately has become slow because the summer time in the Northem Hemisphere, but that is ending and we are approaching fast to September, where the buying season starts.
About the Supply/Demand equation the figures are going to deficit, not to superavit and the world openess and the vaccine nearer day by day is the horizon the market is discounting. Just simple like that.
Also those coffee bearish analysts don't realize the market is still completed dislocated. Many coffee importers, some of them went to bankruptcy having sold short the diffs at very much lower numbers than the current diffs. They didn't have the coffee and now have to pay very much higher diffs to get it. They are losing tons of money. Origins will not accept selling coffee at last year diffs. So the only solution that I see is coffee prices will go up and diffs down.
And ICE coffee stocks depleting do matters. It is just the expression of what's happening in the real physical market.
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