Concerns over coffee supplies out of Brazil may have triggered a short-squeeze in the futures market, forcing large bearish traders to close out positions and buy into the rally. Managed money turned net short on coffee after a selldown of net 21,000 lots over two weeks, Agrimoney reported.
Nevertheless, Commerzbank warned against chasing the rally in coffee.
“Admittedly, global stocks are now at a very low level – yet the arabica crop in Brazil, which is now being harvested, looks set to be very good and is likely to ease the supply situation,” Commerzbank said. “Although estimates vary, many observers are anticipating the second-highest crop of all time. It is questionable whether it will make any further gains.”
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