Thursday, August 16, 2007


King Harvest Will Surely Come?

We are at a crossroads. On the low road there is a potential record breaking crop projected for Brazil next summer.
On the high road, there has been a possible “false spring”; a doomed flowering initiated by early unseasonable heavy rains in Brazil. By almost everyone’s account, it is way too early to try and quantify the effects of this premature flowering on the next crop. If the flowers that have now appeared do not set and develop into beans, the crop next year will certainly be reduced. By how much? Who knows?
There is always an effort to sway the market one way or the other at this time of the year based on rainfall and the coffee flowering in Brazil. But this year the question looms larger because it is possible we are headed either into a big surplus or significant shortfall situation, totally dependent on the next Brazil crop.
Then again, with coffee now lumped into a basket of fund activities, and money flying all about at the whim of the managing puppet masters, it pretty hard to get a feel for where prices should be, regardless of what we think we know.

Given the current uncertainty and undefined future, we usually recommend that it is better to be 10 cents wrong than to try and be perfect. The C market has been recently as low as 1.09, but has rallied to 1.20, and today, dropped 7 cents back to 1.12! The stock market went down 300 points in one day and then recovered the same day to close up! Did money leave commodities to buy stocks?
Trying to predict coffee prices is a crap shoot…
But with regard to real coffee beans, we do know a few fundamentals. For instance,
Centrals are winding down and most of the good ones we have cannot be replaced until next spring. Now ‘til December the supply will gradually diminish. What sells first? The best and the cheapest. “After the best is gone, the best is left”.
To be a little bit wrong right now, and fill in some needs is probably a prudent thing to do. If the market does go lower, look to buy for the first 3-6 months of 2008.

Here are some of our current recommendations to buy now:

New crop Sulawesi…Sep to Dec shipments will be the main window
New crop Flores…limited supply on this new emerging specialty coffee.
Good Colombians, on the spot, or nearby…..The main harvest will start to flow into the market in Dec and Jan…. We have a long way to go.
Any Centrals….now is the time to cover Sep-Jan.
New crop New Guinea & Peru…..bright fresh coffee to pick up the blends.And, any coffees that are hedged….buy on the dips.

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