Petricca’s Pick 01/24/2024

COFFEE LIQUIDATION

 

Those of you that did in fact purchase coffee futures at $155.00, in coordination with my lower 25% parameter should liquidate these positions before the end of today’s session. Clients and subscribers should note that my Long-Term trend following methodology is down for coffee futures.

 

Coffee futures are trading $192.90 today. Total Profits: $15,160.00 per 1 contract.

 

 

My September 6^th, 2023, post read as follows when coffee futures were trading $155.00…

 

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.

 

When one contemplates an investment of this nature it is imperative that you are “in the market’ when commodity “Episodic Volatility” occurs. It’s important to have a

Fundamental vision regarding future events that could affect price movement.

 

Remember there are four important components regarding my strategies…

 

1. Positions are established only in the upper or lower 25% of the Long-Term trading range.
2. Positions are established only when my trend following methodology is up or down within that 25% parameter.
3. Positions are held until positions reach the opposite extreme high or low. (The upper or lower 25% of the Long-Term trading range).
4. Correct money management strategies must be implemented.

 

There is no question that more that 90% of commodity investors lose money…

 

And it’s true that my strategies also incur drawdowns…

 

But – What I offer is a way to be “in the market” when major commodity moves occur.

 

My strategies require one to maintain –

 

• Patience
• Commitment
• Vision
• Discipline

 

Those of you that have an interest in additional details regarding my strategies should call me personally. 312-690-7763.

Would love to hear from you.

 

In the meantime,

 

Have a great year trading!

 

Best

Frank

Questions? Ask Frank Petricca today at 312-690-7763.