A forecaster in Brazil says that coffee crops across the southeastern Brazilian states of Sao Paulo and Minas Gerais will get rain during the next few days, while hailstorms look unlikely.
Expedito Rebello, the head of research at the government-led Meteorology Institute, told Bloomberg News that "the rains will help the coffee harvest after all these months of drought. The weather will be very good for the flowering of coffee trees from now on."
The two states grow 85 percent of Brazil's coffee crop. The country is the largest grower and exporter of coffee in the world, so its weather patterns tend to be closely followed by commodity futures brokers and traders.
Yet despite the positive signs for the crop, coffee futures surged in trading today, as the dollar fell against a basket of currencies. On the IntercontinentalExchange, Coffee "C" futures for March 2011 delivery climbed 3.363 percent to 190.25 cents per pound.
In the U.K., arabica coffee futures on the Liffe jumped nearly 4 percent to 189.35 cents per pound the beans are up nearly 50 percent in the last year.
It's unclear what's driving the current surge in coffee, though it may be based on technical buying and the absence of harvest forecasts from Vietnam, says Bloomberg.
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.