Coffee Futures Off Big

Coffee Futures Off Big

Well my first morning back – and I see that all of my gains from last week were completely wiped out by a sharp drop in coffee this morning. I am guessing this is weather related. My December contracts closed today just above 130, after flirting with the 140 mark late last week.

It must be raining in Brazil, or at least rain is forecasted. The question now is what to do. The old saying is to buy on the rumor and sell on the news. Well, it looks like the news hit – at least some of it. Unfortunately I am not a very good trader – I just try to play the fundamentals long term.

So I am planning to hold. I may pickup another contract if I can find some news indicating this sell-off to be overdone. Long term coffee is a buy, so I will endure the swings and just bide time until we get the super spike that’s coming.

Here’s a good blog that I often read by Jurgens Bauer – he mentions how strong the demand picture is for coffee. It’s plain and simple – the world is drinking more and more coffee.

My recommendation here: hold (if you are already leveraged) or buy (if you are looking for an entry point for a longer term position)