Raw sugar and coffee rose on speculation that investment funds that track commodity indexes will increase their holdings. Cocoa, cotton and orange juice also advanced.
Investors will probably buy 31,451 contracts of raw sugar and 11,148 lots of arabica coffee as weightings shift for the Standard & Poor’s GSCI and Dow Jones-UBS Commodity Index, Morgan Stanley estimates. The changes may bring inflows of $1.5 billion to the sugar, coffee, cocoa and cotton markets, Hussein Allidina, the head of commodities research at the bank in New York, said in a report today. Sugar, coffee gain as index funds rebalance; cocoa, cotton rise
So this buying will not last long. Right now coffee is down 2 or 0.02, depending on your price format, from the peak today.
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According to the j. Ganes December report - Per the USDA numbers, last year there was a statistical loss of 11.5 mil bags. The year before that there was 8 mil bag difference. In three seasons, this implies a total loss of more than 22 mil bags that are simply unaccounted for. This could lead to supplies being larger than officiallu reported.
Also, the seasonality chart for KCH13 shows a top in Jan/Feb. Reason to be bearish on Coffee? Sell Calls 205/210, DTE 32, if able to get fills?
You ag traders are awesome. I don't know how you do it. The few times I looked at ag products, it was so amazingly slow it seemed like it took an hour for the price to move a tick. It left me with the impression that if I'm going to trade wheat, I'd get more action just planting it in my backyard and watching it grow.