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“A stronger dollar plus drought-easing rains in Brazil: Why are coffee prices soaring?”

by Jim Roemer - Meteorologist - Commodity Trading Advisor - Principal, Best Weather Inc. & Climate Predict - Publisher, Weather Wealth Newsletter 

• Thursday Coffee Report - November 7, 2024

On Wednesday, coffee prices broke through resistance again, which has been a “volatile” crazy market over the last few months. One minute the market is watching (and responding to) drought-easing rains in Brazil and the stronger U.S. Dollar which usually hurts some commodity markets. Then… the next minute, watchers and traders focus back on the irreversible crop damage from an 8-month long drought that has severely hurt more than 30% of the nation’s coffee crop.

Here are some excerpts from my WeatherWealth newsletter sent to subscribers on November 1st, before the recent new explosion in coffee prices.

2) Drought breaking in Brazil due to the warm Western Pacific Warm Pool. (La Niña may not even form.)

3) Brazil’s coffee crop is still being compromised due to “previous” stress from heat and drought.

4) Pictures like this are helping coffee prices rally:

5) Drought easing in Brazil and record net long spec position could still prevent coffee prices from reaching $3.00

Our BestWeather Spider became less bearish more than a week ago as we caught wind of more previous crop damage in Brazil. Notice the global crop score on the Spider is modestly bullish (+2), vs a record-long spec position (anti-herd mentality is bearish (-2). This continues to create “wild gyrations" in coffee prices.

So… how does one trade coffee volatility and where might prices be in another two to four months? 

Here at BestWeather, Inc., our WeatherWealth newsletter has formulated various options strategies in many soft commodities based on an El Niño neutral in the next few months, the stronger dollar vs some previous crop issues. 

Please request a 2-week free trial period here “only if you have not had one already” (!!!) 

https://www.bestweatherinc.com/membership-sign-up/

Thanks for your interest in commodity weather!

Jim Roemer, Scott Mathews, and The Weather Wealth Team 

Mr. Roemer owns Best Weather Inc., offering weather-related blogs for commodity traders and farmers. He also is a co-founder of Climate Predict, a detailed long-range global weather forecast tool. As one of the first meteorologists to become an NFA registered Commodity Trading Advisor, he has worked with major hedge funds, Midwest farmers, and individual traders for over 35 years. With a special emphasis on interpreting market psychology, coupled with his short and long-term trend forecasting in grains, softs, and the energy markets, he established a unique standing among advisors in the commodity risk management industry.