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Home / Futures Blog / Brazilian rains, election bring coffee prices down

Brazilian rains, election bring coffee prices down

October 27, 2014 by Daniels Trading

In Brazil, after weeks of drought and uncertainty surrounding the presidential election caused coffee prices to rise, the commodity finally saw its rally come to an end on Monday thanks to some much needed rainfall.

Bloomberg reported that Arabica coffee for December delivery fell 1.3 percent today to $1.8905 a pound on ICE Futures U.S. in New York after dropping 9.1 percent last week.

Crops suffered over the last few weeks from the lengthy droughts in Brazil's main coffee growing region, Minas Gerais. Due to the adverse affect on the coffee supply the lack of rains had, prices surged this year – up 71 percent over last year, more than any of the other 22 commodities that Bloomberg's Commodity Index tracks. The rains have helped the parched crops and put an end to the rally that coffee has been experienced

"Prices were reflecting a continuation of the drought. If it is to end, that would be a new scenario. If the rains continue, it will certainly undercut the rally," Paul Christopher, the St. Louis-based chief international strategist at Wells Fargo Advisors, which oversees $1.4 trillion, said Oct. 22 to Bloomberg. 

Additionally, the re-election of president Dilma Rousseff could weaken the Brazilian real further, making local coffee prices – denominated in the Brazilian currency – rise. The rest of the world, then, will likely see prices fall even further, according to Agrimoney. 

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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.

Filed Under: Archived News

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Risk Disclosure

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.

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