Lower Crop Estimates in Brazil Mean Lower Coffee Futures

Coffee futures appear to be in an all out down trend since the middle of last month thanks to a change in weather where it was needed most. Coffee futures respond most to Brazil’s status as the world’s top exporter & producer and recently they have experienced enough rains to ease drought damage for their coffee plants.

Brazil’s Agriculture Minister has gone on record as recently saying last month’s rains have reduced the impact of the worst dry-spell in 50 years for coffee growers – less severe coffee crop damage than estimated. He went on to say that farmers may realize a “bumper” coffee crop next year.

Kevin Craney, Director of Managed Futures at RJO Futures in Chicago, had this to say regarding the current coffee futures situation,With supply concerns dissipating due to recent rains the trend in the coffee (futures) market is bearish. So long as these supply concerns are kept in check, then this market will continue its downward trajectory.”

Coffee futures trend is down with the market extending their lows in the past two trading sessions. I have to be especially selective which coffee trades we take due to an initial margin requirement of over $8,000 per contract in order to maintain a 25%-30% margin to equity ratio standard.

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