Just sell it and forget it! or ...wait until the market comes to you!.
Today's all pointed out for further weakness. Brazilian Real currency fall again and there were no signal of a new stimulus package for the US economy and perhaps the worst, Boris Johnson was imposing new set of rules or restrictions for social activities as restaurants, bars, etc.. that maybe the rest of Europe will tend to imitate
And that is because there is a new wave of contagion in Europe and the media were pointing out that the entrance of the flu season and the winter time for the North Hemisphere, could make the Covid 19 situation getting worse and worse.
Fortunately and currently, there is no new lockdowns but social activities seems will be more restricted in UK and perhaps that will be extended to all Europe, situation which is not good for the coffee market.
However there is another face of the medal we need to see.
We should notice the market is far a way to look as "normal".
There is an "insane" situation in general:
Currently we could be witness of a colossal Fund exiting position and maybe the reinstating new shorts from them that are taking the market down to at extremely low price levels and all of this in the middle of expectations of a future higher inflation. Sounds contradictory, isn't it?
Also we should notice that domestic prices to buy coffee at Origins are way too high. Even with the current high price differentials the profitability of the exporting activity activity is null.
But all situations are solved one way or another and the results that I see are:
1.Coffee yields are currently being sacrificed when exporting. There will be a lot of claims and rejections ate destiny.!
2.Coops, farmers are losing tons of money and they will return to plant coca leaves. Not everything is FT or FTO or conventional coffee grade 1.
3.Exporters in Origins are very short and struggling to get the coffee with the yields they have committed
4 Many coops and exporters will finally default shipments since commencing next month.
That is the real world of the coffee. I think is not easy to see your screen and watch the market everyday and take good decisions but alsos is not easy to see the other part of the medal and muchless easy to live with all those problems.
At this time, all the technicals and perhaps Fundamentals are pointing lower, but IMO, there is a big short bubble that is growing now in the coffee market.
That situation has been created and the result is a extremely high complacency scenario.
IMO, number 1 to 4 will weight soon in the price equation and bear traders could be caught really short.
Take care friends!
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