Commodity Trader's Almanac 2O11

72

AUGUST GIVES

COFFEE A LIFT

Coffee has increased in popularity on an interna-

tional scale in the last few decades. Most con-

sumption had been from the United States, parts

of Europe, and Canada. Many Europeans have

switched from tea to coffee, and with the intro-

duction in late 2005 of Starbucks coffee in

Europe and in Asia, more and more people are

consuming “Vente Lattés.”

Demand is improving, especially for higher

grade and quality coffee. With increasing global

consumption habits, if there are threats of supply

disruptions or production declines for higher

grade coffee, the futures market can be prone to

extreme price moves.

Coffee typically tends to start a seasonal bot-

toming process before distributors begin buying

ahead of anticipated demand in the upcoming cold

winter months. This is the time to cover the best

seasonal trade short position from May on or about

August 9. It is also a time to look for a short term

trade opportunity from the buy side. Traders

should look to enter a new long position on or

about August 16 and hold this position until about

September 2. This trade usually falls right around

Labor Day. However, this was not the case in 2009,

but once again we would like to point out that if

one uses technical indicators to help time your

entry, it may have kept traders from entering this

trade until early September or from entering at all.

This trade has worked 24 times in the last ...