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Re: UPDATE USDA World Production - for 20/21 (Brazil. Peru, Mexico Guatemala)
Thanks Gomes. Looks like we're within about 200k bags of each other cumulatively over 2 years now. Kannan, getting back to 175MM global production this year would be monumental even without the bad weather in Brazil, as it's an off cycle. Now it's a long slow burn of whether the crop is just big enough to keep the world supplied and prices elevated but not in the stratosphere, or whether we deplete consuming inventories enough to sling shot. It's ultimately unknowable until it happens. In the meantime I expect to learn nothing new in the next 3-4 months, and it wont be until fall-winter exports that we have a better glimpse of Brazil's crop, so expect trading opportunities around the macro ebbs and flows. Only thing I know is I'd rather be long or flat, not interested in shorting a market that could go 50 cents higher at any time. Base case for me is a 140-180 trading range, but there are no certainties in coffee. Last year's crop could have been 73 MM, with a bigger crop this year than market expects by another couple million, we could easily revisit 120, or if the arabica crop is really closer to 30 MM we could trade 220+.