Would love for a dip into that 11975 level. Seems like anything near 1.20 is short lived and met with good buying.
Two more trading days in 2020, and I think we are all happy to usher in a new year. From a trading perspective, I think the market seems poised to make some noise in 2021.
In reading a post from Gomes yesterday, this excerpt stood out to me:
"Indications of rainy weather over coffee regions in Brazil also represent a bearish aspect. Moisture is favorable to the development of grains for the 2021 harvest, mitigating the problem of water deficit in regions affected by drought throughout 2020".
I find that hard to agree with, as the damage has been done. While rains are always beneficial, "mitigating the problem" should come with more clarity. Rains definitely help as far as the trees go, but I think any mitigating comments should carry the 2022/2023 along with it. I will leave it to the more qualified agronomists to discuss if there becomes a time when too much rain becomes an issue (particularly as it relates to trees already in weaker than normal condition). I've mentioned in the past, often times the headlines are misleading and are interchangeable depending on the market movement. Surely the next 5 cent rally will carry a headline stating crop concerns due to dry weather.
Looking at some past COT reports (same time frame). I.E late 2016, spot H trading in the low 1.40's. I chose this time frame for no real reason other than it was year end.
A few observations that strike me:
-Open interest was considerably lower than where we stand today. In other words, current OI is high.
-Commercial shorts are considerably "shorter" today than they were this time 4 years ago.
-Managed money, small traders, larger traders very similar positions.
-Index trader "longs" are considerably longer at this time.
For whatever its worth the market (spot month) through late April of 2017 traded between the 13600-15300 levels for most of the period. For me, the focus will be on the OI. What impact (if any) will the re-balance have on the market? How will commercials behave if we begin to get beyond the 1.28-1.30 level? I think any pivotal change in other market participants will be important, so will that come into play ?
Macro factors : Covid-19, currencies, a new US administration, just to name a few.
Wishing all a happy, healthy and safe new year.
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