20250312 Weekly Coffee *Premium*

hey and welcome back to another premium coffee Market Video Report with me your friend and host here Ryan Delaney the chief analyst at the coffee Trading Academy good to see everybody this week all right what's going on well uh we've been talking for a couple of weeks now about the potential that we're going to see some new uh starts come in right we had rumors of these uh uh Central American coffees uh coming to the board uh we saw uh apparently briefly uh tender ball values so if that is the case if those coffees are

going to come we're going to need to see them in the next few sessions now just today uh we did see some Hondos coming in so that could be the beginning of these uh coffees that we've been uh warned about um that uh would of course be bearish for calendar spreads particularly in the in the front month uh it doesn't seem like it's going to resolve the overall uh problem uh but it could be u a negative uh in the more short term now we have uh you can see here the the low prices uh

from that time when uh we do believe that they were tender um and uh since then prices have only increased so I wouldn't expect this to be a steady flow uh but there could be um a chunk of coffees coming to the board now uh from this time when they were tender so that's what we're looking out for um but unless we see uh differentials come off uh it doesn't seem likely that that is going to continue uh from these markets um currently prices are still pretty high uh both in the central Americans and Colombians

um and also in Brazil uh seeing the Futures Market uh come off a bit uh in the last uh several weeks uh that has been a little bit supportive Brazil remains firm and their diffs uh due to the weather problems that we've seen there um and uh we did get in our uh Brazil farmer survey uh those of you who are gold and silver clients should have already received that uh the full report there uh and uh our bronze clients that uh report will be available for purchase uh if you are interested um it's uh

uh we we offer it as a at a cheaper rate to our bronze clients than we do to the to the general public um but the the headline uh takeaway from our farmer survey is is that the um uh araba crop is looking uh weaker and the robuster crop is looking stronger and I I'll get into a little bit more details into that in a second but coming back to what we're talking about with getting those certified uh stocks in uh that does seem to be uh taking its toll on the front month uh of

the curve here that could potentially be why we've seen those uh uh uh calendar spreads come off uh in the front um in the back it remains still elevated um we have kind of that contango shape um but it is uh still all well above uh zero um so it is it is still an inverted Market uh even though the front month is coming off and we are still seeing the the carry uh priced in properly uh into the market here so uh if we do see these CTS continue to come I I think that

there's there's more downside potential uh in the front um but if uh if those uh new Central American that we' heard rumors about uh being delivered underperform uh then we could see this pop back up uh Robusta um we're a little bit more bearish that spread there we see good coffees coming out of uh Vietnam and as we mentioned the Brazil uh robuster crop is looking quite good okay I gave you that headline uh number or rather headline uh uh conclusion from the report which is that the Raba crop is looking worse and the robuster

crop is looking better um and uh we don't seem to be getting a lot of relief from weather uh at the moment um going forward it looks like it's getting a bit better um but uh during these critical last few weeks uh the rain has been uh disappointing uh that said the market has kind of been consolidating and moving sideways we've got sort of a triangle pattern uh developing um but we have some key uh bearish thresholds here to watch out for and that's about 370 cents uh if we break below that then it is

looking like a shift to a bare Market uh if not then we could see this Market continue to move higher all right now looking at uh our uh scorecard here you can see that the fundamentals are generally bearish we've got bullishness in the front here uh prices are elevated here over the next month or so um but that does decline as we as we move forward in the year which makes sense um with our um view that uh if uh you know all things being equal uh we should have a recovery in the bra Z

crop next year now you can see here that our macro uh is a bit bullish in the short term um things have gotten bad for the US dollar um in the last week or so uh the uh stock market as well has taken a tumble um the uh protectionist language coming out of the Trump Administration uh the uh tariffs coming um and uh weaker uh outlooks for the US economy in general uh all have been pressuring the US dollar which has been uh an elevating or bullish uh impact on on coffee and other Commodities so

we can see that uh uh playing out here um whether or not that continues um remains to be seen uh we think the long-term fundamentals are still relatively strong um so uh we could see that reverse as we move forward into the six-month in the one-ear area now uh positioning we don't have a lot of upside in the positioning here um in terms of uh the traditional way of looking at things the specs are already very long we can't see a lot more buying impacting the market um uh from the speculators where the risk comes

from would be if we get a uh a capitulation of the commercials um and that is very much a risk still given the fact that uh the commercials are struggling with credit uh and prices are still very very high uh record levels um on historical basis so that is still a possibility uh although with the selloff of the last couple of weeks um that has diminished somewhat we'll take a closer look at where the commercials are uh later in the presentation all told um the technicals have softened quite a bit in the front um but

are generally all still bullish um but we'll see how those are turning and the potential for downside the weather is improving but it's improving from a rather negative point of view here we have a lot of uh uh in uh Brazil um that is going to be a negative for the crop there uh we'll look at that more specifically now if we add all these together you can see that it's basically our bullishness is front loaded here in the first uh uh month or so and we are bearish in the sixth month and Beyond so

we're still in that bullish kind of danger zone now uh but the longer term view is uh that the market is going to start selling off all right now taking our uh you know 100,000 foot view here um and looking at uh what is the uh overall fundamental Outlook we've had years of uh bullish deficits in the past moving into a surplus year uh this coming year um but uh now that is uh even in Arabica we were going to have a a small uh Surplus however that is now at risk um based on the

results of our farmer survey we are reducing uh our rabit crop out of Brazil um so we are projecting a small Arabica deficit uh this year um it's not a huge deficit not super impactful on its own but on the margins given the fact that we've had years of deficit already uh and isn't really improving um it's still uh rather U bullish uh development in the crop um you can see here uh that the 25 26 projections are below average it's not particularly looking good if this is an onye this is a particularly bad on-year

crop uh for Arabica now the flip side of that is that the robuster crop is is looking quite good you can see here that it is in the higher end of the range of the last several years um all of the uh accounts all of the major robuster regions uh have been uh showing uh positive projections uh we've been hearing that from uh friends in the industry in addition uh to our farmer survey uh but the farmer survey uh did in fact quantify that and you'll get a fair amount of granularity from it in in

the full report now in Vietnam we are seeing exports pick up now above average for the first time in 2425 uh so this is confirming the larger crop that we had been uh projecting um there had been talk about will we need to reduce uh the size of the crop uh based on these exports coming out uh but it does seem like the uh uh the lower exports um is more to do with uh slowdowns around tet um and uh other extraneous factors as opposed to the size of the crop itself um and now we

are seeing those exports pick back up now Brazil by contrast is seeing the exports uh come down um this is because the uh crop is um uh small we have low stocks and low availability uh in origin at this point um the reason for the the higher uh exports uh last couple of months seems to have been uh backlogs uh from logistical problems uh getting uh shipped out so um these are essentially delayed exports from uh previous months now that all of the backlog has been worked through uh the projections uh for February are looking

uh not so good okay now uh mentioned we're going to do a little bit closer look at the co and this is that um the specs have been selling off here but uh this is really very light selling you can see here that all told we're still at the highs in terms of a long spec position so if the specs return to Full Tilt bullish and do all of their buying uh they only have this much room uh only you know maybe another 10 15,000 Lots uh that they can uh add at this point which

is really uh not moving the needle that much when the market's at $4 um by contrast there is a lot of potential selling here uh if and when the specs uh liquidate um because they have all this you know 50,000 Lots here just to get back to flat and that's not to mention if they actually become bearish and start uh selling below uh zero and getting short now the commercials this is that risk I was talking about if the the risk where the commercials capitulate um that does seem to be less of a risk now

that the market has sold off and all things being uh said the the commercial is actually decently well covered here you see they're not super short uh they are actually above average in their coverage here um so they don't seem to have that same uh vulnerability they have had in the past um but you know there's still that risk especially because of the credit situation and the overall uh High Futures market price now Robusta similar situation to Arabica not quite as extended as they are uh but we do still have that same bearish risk uh

from a spec that sells okay uh we mentioned mentioned the uh abysmal performance of the US dollar lately and you can see that the protectionist policies are taking their toll uh or protectionist rhetoric I should say um is taking their toll on the US dollar here um and that uh the these three days here in particular really uh smacked the dollar down um and all of this uh bearish dollar here has been um uh I would say largely responsible for propping up uh coffee in this last leg here um prior to this point uh coffee

had really been rallying despite the US dollar um R uh being strong and now the coffee is rallying uh because the US dollar is falling or it seems to be being supported uh from that if that uh projection continues and the US dollar continues to fall um we uh and we think that there is uh cause to believe that it that it that it will um the US inflation is projected to come off uh so we don't need to have those same high interest rates that we've been having um there's a speculation that the US

is moving towards recession uh and of course a recessionary uh economy would uh instigate uh rate Cuts so all these are kind of negative for the US dollar uh which can be supported for Commodities okay uh we mentioned that dryness in Brazil here um and uh you can see here the last 15 days so all of that uh is still uh very bullish still had a very negative impact uh on the coffee crop we believe um but it is at least drying out in the home stretch here um most of the damage is already done

we think at this point um it's great if the coffee uh areas get a little bit of rain over the next two weeks um but really we're getting quite close to the crop here as we get into April and May um so we don't expect a huge uh recovery um from getting some more rain right here at the end right before Harvest temperatures have been right on the cusp of uh being dangerous for the coffee crop here uh the pink uh colors are the problematic ones the the dark orange and red uh those are uh

actually below the risk area here so you can see um none of the the dark pink which is the real uh problem area are hitting the main coffee areas um but it is getting a little bit uh close to that in Sado and some of the other regions okay uh Africa mostly looking pretty good uh it is a bit dry in April but then um picking back up uh in Kenya and in Uganda and Ethiopia um all through May here so that is supportive for those particular crops Vietnam mostly looking quite good here um we've

had a good uh uh blooming season um we've had good rains all through that period um this is all supportive of the next crop uh it's a little bit dry in April but that's fine because it's been uh quite wet so far uh and then in May and June uh picking back up so uh all told this looks relatively positive uh for the crop there there's some dryness uh but all all in all this is is pretty decent all right now we're going to wrap up with looking at the technicals here and uh what we

see is uh uh a market that is still very much a bull market um but showing some warning signs here the prices are below that 20 period moving average the 20 period moving average is turning uh and uh our uh signals here our technical studies um they're a little bit mixed but uh they've got some uh bearishness uh built into them at this point so looking at all this what does this mean well for me this says that right now we are in a consolidation point right here uh we can see the market moving sideways

here into maybe some kind of a triangle formation um so that is what the market is currently doing is it's consolidating um we do have a major risk point here which is that 370 cents level if the market breaks below this 370 here uh then this is no longer looking like a consolidation and instead it's looking at like a a failed secondary Peak uh and anytime we see these failed secondary Peaks sort of here's one here uh and the market breaking below that um that is a uh very Universal side here's another one as well

failed secondary Peak whenever we break below that uh here's another one um those tend to be uh very strong signals that the market is moving into bare uh territory so for now we are not there yet right now we are in a consolidation but if we break below this key level here um that is going to look very negative for the market the market is going to be uh very concerned about that and take it seriously Robusta um looking relatively stronger uh than araba in that it has a very nice solid consistent uh Trend channel

here um but showing some of those same warning signs in the studies uh they've got a bit more downside room here um so I'm I'm not as concerned with the robust Market at this point um and there's also uh with the benefit of demand um given the relative difference between the price in Raba and the price in Robusta Robusta is looking relatively um uh attractive from a consumption point of view so we could see a demand pick up uh if uh uh the Arabica prices remain strong Okay so we've talked about the uh conclusions from

farmer survey which is a smaller Arabica Brazil crop and a larger Brazil Robusta crop um we talked about the uh macro influence from currencies and how the weaker US dollar from the protectionist policies and potential recession uh coming in the US uh is hitting uh the dollar which is in turn uh buoying and supporting uh coffee and commodities uh we still have those same industry credit problems uh and the very high prices uh in the Futures are going to be making it um uh still a risk that we could see that capitulation uh from roosters

and from the trade all the commercials we still have that dry Brazil weather although that uh threat is uh actually diminishing um we have the uh Arbitrage incentivizing uh robuster consumption and disincentivizing rabika consumption and uh pretty much the the largest bare Factor um would be the very large uh spec position spec long position uh if they do sell that is going to be uh a real negative for the market all right that's our report for this week thank you all for being uh clients and Friends uh we look forward to seeing you possibly at

the sca if any of you are going to that please look me up uh and uh feel free to reach out if you have any questions or comments always happy to chat with you