wmeubank@ocp.kcmo.com
THE HIGHTOWER REPORT
141 W. Jackson Blvd., Ste. 1520A, Chicago, Illinois
(August 13, 1997) COFFEE: As we expected the process of predicting the crop has narrowed the field of estimates closer to the top of the range. Brazilian and German sources last week raised their forecasts from 23 to 25 million which is about the middle of the range if not the lower end of the middle. The final level is very critical as the price structure of coffee lends itself to a wide adjustment in price depending on how the world coffee supply measured after this crop is complete. While colder weather is certainly expected and some light frost has occurred the damage time is nearly past already. Comparing this year's prices to last year's might provide some guide as by all intents and purposes world production and exports are going to be above last year and prices have only just recently fallen back below double what they were last year! Given the falling uncertainty with total supply the issue of tightness, quality and demand prevent an instant and massive price decline. However, as some supply from the harvest overwhelms storage on farm (expected early in September) the physical supply should at least be moved away from critical. In the near term we expect two major downwaves the first of which is already underway the second of which comes in anticipation of CSCE stocks increases in September. Holding long puts is advisable given the power to scare prices higher off the scarcity of nearby supplies!
For daily market updates of the Hightower Report of Comprehensive Commodity Research, call 900-225-2200, extension 6 for Softs Markets. The cost per minute is $1.33.
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