I understand your reluctance to believe in the bull case. Coffee has done a wonderful job through the years of foiling bullish traders. In this opaque market you review your case daily you add and subtract information and then you deal with your emotions as a large contract plays with your PandL like a ping pong ball. I too expected better results sooner but I only see the case strengthening as time goes on. Coffee traders have always refused to believe in bull markets until the bull”s horns are ripping their shirts and that has resulted in the vertical moves we’ve seen in the past.

To see where we are we have to go back to 2020 and the 20/21 production year. Brazil had a huge crop and these countries all had good crops, Colombia, Indonesia, Uganda, Honduras, Ethiopia, India. Coffee shops worldwide were closed premium qualities of coffee backed up as the customers of those coffee were out of the market.. Brazilian semi washed was delivered in large quantities to the exchange something that had never happened. Brazil also exported over 45 mln bags a new record by 4 mln bags squeezing out traditional suppliers.I’m not a fan of the USDA ending stocks number but they put the world stock number that year at 36 mln bags. I don’t think it’s unreasonable to expect that the producing countries had stocks available to sell this year at these very favourable prices and make up for production shortfalls that we know occurred in Brazil, Colombia, Honduras, Uganda, We see a dramatic drop-off in August shipments, indicating these inventories have been exhausted. We now have to rely on production and consumer stocks of 23 mln bags.

I wouldn’t read too much into Brazil September shipments. producers owe coffee from last season and the market structure is encouraging shipment now. One month doesn’t make a year. If you believe shipments can hold up then you don’t believe in the production shortfall which a lot of serious companies tried to avoid but finally came around. I suggest you watch any youtube video on coffee and you can confirm trees looked horrible. Could be videos about pesticide or fertilizer application And not necessarily about crop status. By the way trees don’t look so great right now and cold fronts keep coming through not helping development.If we get a good crop it won’t go further than meeting demand and forwards are already at a large discount.

Global inventories are on the rise?I imaging you are speaking of consumer stocks. Small increase going into winter is normal. Total inventories are falling to very low levels. Vietnam will be entering the new crop with extremely low stocks. Ice stocks are down sharply and even certified robusta stocks are down 1.0 mln bags over the last year.

I understand that it seems like a$1.30 rally played out the bull. Differential, spreads, production numbers speak against a market being in balance. This is a very anemic rally compared to the facts. That’s why I say either way we will see history being made!

2 things that don’t lie are spreads and differentials. The market is tight how tight it will be at Centam harvest is unknowable the best chance for differentials to weaken is the futures price rallying.

One other factor which is delaying the bull case is the lack of speculative money. Risk has been dialled down by trading firms and individuals. I think coffee has done a good job of hanging in there but if we can reduce some of the surprise elements that worry traders that would help a lot nobody wants to lose money!
GT