March ‘22 coffee futures continue the rally this morning with another leg up following last week’s break-out to new multi-year highs. Coffee has been a bull market throughout 2021 with prices driving higher based on strong supply side concerns and a rapid return of demand. The short story is that supplies are tight. Reports indicate exchange held coffee supplies have fallen by over 393,000 bags since the end of June. Brazil, the largest coffee producer, had a challenging year in terms of growing conditions leading to a weak harvest. It’s not expected that the next harvest will be any better. To amplify the situation logistics as most know have been a nightmare. Columbia has had exports slowed by protests and roadblocks earlier this year. Brazil has seen challenging road conditions, and the global shipping container shortage has created a serious set back. There is still a lot of bullish fuel in this market but pressure from outside markets or a risk-off environment could lead to sharp pull-backs.
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