About The Author

Frank Petricca

Frank Petricca is writer of “Petricca’s Pick” focusing on a Long Term approach for commodity traders that have an interest in Long term accumulation. Frank has worldwide recognition spurring innovation that points to communicating a different way to approach ones investment portfolio using commodity instruments. Contact Frank at 312-690-7763.

Visit Website →

Petricca’s Pick 09/06/2023

By On September 6, 2023 - 8:33 AM · In Market Commentaries, Petricca’s Pick

Today’s Long-Term pick is to start coffee futures accumulation.

Coffee futures are in fact within my upper 25% parameter (Please call me personally for free Long-Term charts) where fundamental considerations are bullish.

It’s all about simple supply/demand economics…

World coffee production was in fact higher than last year, but global ending stocks remain extremely tight.

According to the “Coffee World Markets and Trade Report” –

World coffee production for 2023/24 is forecast to be 4.3 million bags higher than last year conversely global consumption forecast at a record 170.2 million bags, leaving ending inventories at a tight 31.8 million bags.

 

Subsequently –

Weather will be an important factor going forward…

And right now, Indonesia, the number four coffee producer in the world is facing what one might call an “El Nino” jolt.

  • Forecasts of dry weather for the rest of this year and into 2024.
  • Dryness in crucial crop growing areas.
  • Excessive rains in Sumatra, java reduced coffee output.
  • Coffee output in 2023/24 seen down 9.7 million bags, from 11.85 million bags.

“If there is continued dryness, Indonesia’s coffee production could fall dramatically in 2024 through 2025” said Carlos Mera, head of Agri Commodities Markets Research at Rabobank.

 

Longer Term –

JUST 2% OF TOTAL COFFEE PLANTATION AREA HAS BEEN REPLANTED SINCE 2018.

Almost all of Indonesia’s coffee plantations are tended by smallholder farmers that use antiquated planting methods and limited fertilizer. Many trees are old, with some planted more than two decades ago.

“Our farmers lack focus; they plant various commodities on their land, not just coffee,” Muhammad Rizal, director of annual and perennial crops at the Agriculture Ministry told Reuters.

 

While there are certainly no guarantees –

One would agree that any production problem anywhere in the world could propel coffee prices significantly higher due to the already low global ending stocks situation.

Spot coffee futures punched out highs at $260.45 in February of 2022.

Today, spot coffee futures are trading $151.40 where Long-Term accumulation is now recommended.

Seasonally coffee futures bottom the September/October time period due to the Brazilian coffee harvest.

Peak price period for coffee is the January/February time period.

I will be buying all corrections for the March coffee contract…

My Long-Term objective is the upper 25% of the Long-Term trading range which is the $260.00/$280.00 price level`.

Those of you that have an interest in learning more about my Long-Term strategies should contact me personally at 312-690-7763.

 

In the meantime –

Have a great year trading…

Questions? Comments? Please call.

 

Best wishes

Frank

Questions? Ask Frank Petricca today at 312-690-7763.        
Tagged with: • • • • • • • • • • •