Coffee May Get A Break

  • January 9, 2001
  • Marc Dupee

Coffee
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seven-year lows at its holding-pattern-on-lows formation after Colombia–one of
the world’s major producers–said it would remove price supports for its
domestic coffee because lower prices have made it too expensive to maintain the
subsidy. But several fundamental factors may be brewing to finally grind out a
bottom in the commodity that is trading at one of its lowest levels of the
decade. One, an upcoming meeting (Jan. 24) of the Association of Coffee
Producing Countries could result in a retention plan that would keep coffee off
the market and dry up supply. Two, speculation is swirling that despite
favorable rains in the world’s largest producing regions in Brazil, crop
forecasts could come in below par. Third, Vietnam, a minor but not insignificant
player, is reported to have a problem of rotting berries on coffee bushes.  

Momentum-5
market March sugar
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particularly good to use the 1090
Open, because of its propensity to rally off its opening bid. 

Soymeal
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pattern, is exploding off support of the early-December lows. The contract also
gave a strong sign that it could reverse the 20-day low laid yesterday by
rallying back from the low to close on the high of the session. March wheat
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corn
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entire grain complex could rally. 

Non-natural gas energy
contracts are continuing to rally despite reports out today that OPEC could cut
its output by even higher volumes at its upcoming meeting on Jan. 17. The amount
of a possible cut has increased from 1.7 million barrels a day to 2.2. A
warmer-than-normal winter in Europe is helping out February heating oil
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Excess supply is being diverted from Europe to the major producing region in the
American Northeast and that is helping drive the Implosion-5 List
contract to a new five-month low.

Natural gas
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“electricity crisis” in California and is trading on its high of the session and at its all-time high. Any new power plants in
California, the nation’s most populous state, are required by law to use natural
gas.