on November 25, 2021, 7:56 am
Yesterday was a dramatic move higher. The market remained consistent with the pattern that we have been seeing in which the it lingers in the handle area, this time 240.00, before it takes off to the upside. We haven’t had a serious correction for some time. Still, the market is making a uniformly constructive move higher without much interruption.
Spreads have been strong as well and CSOs have been active. Yesterday someone bought 500 KN +5c Calls at .30 premium. It may be a case of “irrational exuberance” but, in talking to those with trade connections, several commercials did not expect such behavior in spreads. Warehouse stocks are the most convenient coffee available, I believe, and they are being depleted. Still, in November 24 of 2020 stocks were 1,246,345 bags and are now 1,680,887 bags. We are presently 434,542 bags higher than a year ago when prices ranged between 120 to 125. The situation is different with stocks that are sometimes inaccessible due to shipping congestion and also high shipping costs.
For now the market remains steady as delta shorts are watching every move. Variation margins may be an issue for any short, hedged or otherwise. Larger commercials of course are less vulnerable. The real potential shorts are the consumer side of the commercials who need to replenish what is consumed. For now we continue to have a bull market with 250.00 as the next hurdle and a potential new base of support, possibly.
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