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Friday, October 19, 2007

Rain in South East Brazil

Finally rain in the South East regions of Brazil.




Now the question is: how much rain? Will it be enough for an healthy coffee flowering season?
The December Arabica Coffe futures contract in NY was hit by a wall of sell stops with speculators reducing their huge position (42K net contracts long as of October 9): I think that during this week sell of speculators could have reduced by at least 10K contracts their net long holdings, that means the Coffee market could now be less vulnerable (after all it lost 10% in 3 days) but I seriously doubt it can climb back to last week highs: speculators are still too long on an historical basis, I expect coffee to stabilise around current levels (i.e. 1.25) for the next few days waiting for a clearer picture on the status of the next Brazilian crop after these days' rain.

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