Gone are the good old days of a prepackaged pound of coffee since the 9-12 oz. shrinkflation versions were introduced many moons ago amid the inflation-ravaged pickings at your favorite grocery store. Out of desperation, I found myself perusing the Internet for a local deal to restock my coffee stash that satisfies the morning addiction. I scored 30 oz. of Maxwell medium roast for $7.49 at Walgreens, but us plebes must register to qualify for the sale price so that Big Brother and artificial intelligence algorithms can keep track of you even when paying with cash without a thought crime. I suppose growing your own beans is on the horizon since the biometric invasion and OneID are slated to arrive covertly and overtly along with a central bank digital currency (CBDC) that offers no privacy or opt-out for the common plebeian.
In response to a few “Jo” trolls on X that polluted my DMs after I penned “Is a Bull Brewing in Your Cup of Joe?” Part 1 in Dec. 2019 and Part 2 in Mar. 2021, here’s the scoop: Josephus Daniels was the Secretary of the U.S. Navy in 1913 who prohibited alcohol aboard naval vessels, which enticed drunken sailors to drink caffeine laden coffee. A cup of “Joe” is coffee’s shortened slang for java and jamoke. The beverage is considered a “common man” brew, and the forename Joe is likened to a Jane Doe or John Doe (average person).
I am getting off track with ruminations over government tyranny and coffee etiquette, so let’s move on to the heart of the matter while I sip a cup of Maxwell. When researching reasons for the price dynamic of any product or service, variables that ultimately determine the end user’s cost can populate a multi-page diatribe. Below is coffee’s short and sweet version with a sprinkle of fundamentals within a few linked articles, and then we can focus on the bottom line: a price chart.
A Forecast Of Global Coffee Production & Export In 2024… “This year, we have heard about the possibility of deteriorated global coffee production (and shortages) due to weather conditions. As the end of 4Q23 is approaching, most coffee business owners speculate on the global coffee market situation in the upcoming years. Would the future coffee price and production in 2024 from the top coffee suppliers bring them a better net profit? A reverse from the optimistic hope, experts have predicted a possibility of a prolonged crisis that will impact global coffee production and export in 2024.” – Wallacea Coffee, Oct. 31
- Ranked: The World’s Top Coffee Producing Countries – Visual Capitalist
- Green Coffee Assoc. stops publishing U.S. stockpiles – Roast
- Robusta Coffee Jumps to Record as El Niño Worsens Supply Fears – Bloomberg
- Fairtrade International to Raise Price Minimums – Café Imports
- Vietnam Coffee Report: Production Up, Exports Predicted to Drop – Roast
- Coffee Shortage Spurs Brazilian Traders to Send Beans to London – Bloomberg
- The Real Reason Coffee Is More Expensive – The Takeout
- Vietnamese producers urged to focus on quality for sustainable exports – VOV
- Time For a Coffee Cartel? – Project Syndicate
- High Coffee Prices and Shortages: Deep Dive into Vietnam’s 2023 – Kaifarm
- Global coffee prices set for shift in 2024 due to supply changes – Investing.com
- Coffee Prices Break Out to 4-1/2 Month High – Nasdaq
Certified Arabica Stocks Reach 24-Year Low… “The amount of arabica coffee stored at certified warehouses of the Intercontinental Exchange (ICE) fell on Wednesday to 380,033 60-kg bags, the lowest level in 24 years… there was no coffee recently delivered pending the grading process for approval to enter the certified stocks. The low volume of stocks at the exchange is usually an indication that the physical market is pricing the commodity at higher levels than those seen at the exchange. It shows that there is no financial incentive for traders to deliver coffee at the expiration of arabica futures at ICE. Most of the current certified stocks are of coffee coming from Honduras and Brazil… The last time a smaller amount of certified stocks was on the market was April 1999, only three years after the exchange started accepting physical deliveries of coffee on traders’ positions in futures.” – Reuters, Nov. 1
The $JO ETF (ETN) closed on Jun. 8, 2023, and there are no U.S.-based ETFs available to provide exclusive exposure to coffee for retail trading. Conduct your own due diligence (have at it) on what is available in the futures market, coffee retailer stocks, green bean import and roaster companies, and the heap of indices that track coffee beans from numerous sources. Today’s focus is a continued technical analysis on the Intercontinental Exchange (ICE) futures to get a handle on where the price action might be heading near-term.
“Arabica coffee is the world benchmark for coffee futures contracts that trade on ICE. Arabica accounts for 75% of the world’s production and is mostly cultivated in Brazil (40% of the world’s total supply) and Colombia. Robusta account for the remaining 25% and is mostly produced in Vietnam (15% of global supply) and Indonesia. Other major exporters include: Peru, India, Uganda, Ethiopia, Mexico, and Cote Ivoire. Robusta is the coffee bean that is popular in Europe and espresso coffees while Arabica beans are popular in the United States.” – Trading Economics
For the record, $JO’s weekly chart printed $37.38 at the Mar. 26, 2021 analysis, rallied to a high of $70.55 (see chart) in Feb. 2022, and its final price closed on Jun. 8, 2023 at $54. To view a larger version of either chart below, mouse over it and select or right-click it and choose a “view image” option.
ICE-U.S. Coffee Futures weekly and daily chart as of Nov. 3, 2023 close…
Excerpt from the Dec. 13, 2019 weekly chart analysis:
“This week’s price action put in a high of $140, closed at $130, and printed a bearish Plunger Candle (aka Shooting Star)… The parabolic move in price has gotten ahead of itself, and profits were taken this week while approaching the close. There clearly needs to be a period of price consolidation IF the price action is destined to take out the 23.6% Fibonacci and reach the 38.2% level at $172.”
Excerpt from the Mar. 26, 2021 weekly chart analysis:
“The ICE futures chart printed a 2011 high at $308.90 and plunged to a low of $87.60 in May of 2019… The trendline drawn down from its 2011 high was taken out with conviction during the first week of Nov. 2019, and that price spike was halted dead in its tracks at the 23.6% Fibonacci with a bearish Plunger Candle. The positives on the chart are a bullish DMI-ADX, but its momentum has leveled off, and the price action continued to print higher lows since May 2019. The topside lateral resistance is around $140 at the 23.6% Fibonacci level. This week’s price action closed at $128.50. The negatives are a StochRSI that is trending downward, and the last two weeks have seen steady sell Volume despite the pivot off the lower trendline of an Ascending Broadening Wedge on the Ever Given news (Suez Canal Blockage)… The chart needs a substantial boost of buy Volume to push the futures price back into the $140 zone. If the price action breaks away from $140 resistance, odds favor a consolidation somewhere between $140 and the next Fibonacci level at $172. Retail investors can trade JO with bus stops at $40, $45, and $50.”
After the March 2021 analysis, coffee had an explosive rally that topped out at $260 in mid-February 2022. The return trip stalled at the $140 support/resistance zone in Jan. 2023, rallied again to print $205 in March, and revisited the $140 zone at $144 in mid-October, which formed an Adam & Eve Double Bottom. Reports in financial rags since summer and early fall on the potential for shortages and recent ICE inventory data initiated another rally that closed on Friday at $171 at the 50 Exponential Moving Average (EMA) with a Long White (aka Green) Day Candlestick in both the daily and weekly chart on solid buy Volume, which is just shy of the topside 2022 trendline B. Note the potential for a bullish BIG W (red arrow lines) pattern completion IF the 2022 trendline A is breached and the price action nears a Fibonacci Confluence at around $224.
The weekly DMI-ADX is on the verge of forming an Alligator Tongue power trend setup to the upside, and the daily DMI-ADX is in a positive consolidation. If solid buy Volume persists and trendline B at around $173 is taken out decisively, the chart could be wildly bullish. Right now, caution is warranted because a brief consolidation might be developing before any attempt at additional gains.
Coffee Prices Surge On Shrinking Global Inventories – CNBC India, Aug. 27
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