The Arabica coffee front month future price is trading at close to a 5-year low and net speculative positioning on ICE is deeply short and over one standard deviation below its 5-year average….
ETF Securities Research
We believe that coffee prices will be less sensitive to weather conditions in Brazil now that the Brazilian 2013/14 harvest is largely complete. Weather conditions elsewhere will also have a diffused impact on prices because production is fragmented in the countries that start their harvest in October.
With global production remaining high, we believe the current price is justified, but we are watching a number of catalysts that could drive prices higher:A substantial increase in rust fungus; Further intervention from the Brazilian Government could absorb supply; and/or; Appreciation of the Brazilian Real could encourage farmers to withhold stock.
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