Hedges evacuated long positions, coffee beans rally or near end

Overseas media reported on the 13th that the biggest rise in coffee beans in five years may be drawing to a close, because the prospect of good harvest of this product has prompted hedge funds to reduce their bullish bets.

According to the report, relevant data show that since August 17, speculative investors, including hedge funds, have reduced their net long position in coffee by 8.4%. According to forecasts of ABN Amro and VM Group, as of September 2011, the supply of Arabica coffee beans will exceed the demand of 6.67 million bags in a 60-kg bag, which will hit a record high in nine years. It is expected that the supply of oversupply will exceed 6 times in the quarter. Of the coffee beans in the world, about 65% of coffee is Arabica.

Since June, wheat prices have doubled, resulting in riots in Mozambique due to the cost of bread. The price index of the United Nations covering 55 foods rose to its highest level since September 2008 last month. Floods in Canada and crop droughts in Russia and Europe have hit crops. As food prices have risen, coffee prices have also risen.

However, analysts do not expect a similar shortage of Arabica coffee beans. Christophe Ible, co-founder of the Dibbles Group, which manages more than $2 billion in assets, said: "If you look at the supply situation, the uptrend doesn't make sense. People betting on coffee beans may have losses. In the long run, Fundamentals are kings."

On September 8, Arabica coffee futures rose to a 13-year high of $1.9865 in the New York trading market, in part because the market speculated that rainfall in Colombia would damage crops. The Colombian Coffee Growers' Union pointed out this month that in August Colombian coffee bean output increased by 55% to 615,000 bags.

In addition, some analysts have pointed out that the weakened coffee beans will reduce the costs of companies such as Kraft Foods and Starbucks.

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