Severe Drought Curbs Coffee Production
July 30, 2014 2:53 p.m. ET
SÃO PAULO—Brazil's National Coffee Council expects the country's 2014 and 2015 coffee harvests to be about 20% smaller than originally forecast as a severe drought curbs production, the group's president said.
The council, which represents Brazilian coffee cooperatives, predicts a harvest this year between 40 million and 43 million 132-pound bags of coffee but probably closer to 40 million bags, Silas Brasileiro told The Wall Street Journal. The CNC, as the group is known, had a forecast of 49 million bags before the drought.
The worst drought in decades for Brazilian coffee growers has affected the development of plants and will reduce next year's harvest as well. For 2015, the harvest can be "about 40 million bags and no more," Mr. Brasileiro said. "If we hadn't had weather problems, we would have expected more than 50 million bags in 2015."
The dry weather has increased the destabilization of Brazil's two-year coffee-growing cycle, in which production in even-numbered years is larger than in odd-numbered years.
In recent years, improved cultivation techniques and some farmers planting and harvesting on the opposite cycle have already resulted in smaller output swings. Before the drought, Brazil's agricultural agency, Conab, had forecast a crop of between 46.5 million bags and 50.2 million bags for this year, compared with 2013's 49.2 million bags.
Conab has since cut its forecast to 44.6 million bags, and some of Brazil's biggest coffee cooperatives are predicting declines in their output of as much as one-third because of the drought.
lol I'm done speculating about buyouts. JVA has fallen for 7 straight weeks after a good earnings report and I have to question this price action. My theory is that the stock specialist (aka market maker) is/was purposely keeping the stock so they could cover.
There are some potential positives.
1. It was well documented and not even specifically to JVA that Starbucks and Green Mountain held off on buying coffee last quarter due to the volatile and soaring price of coffee. Green Mountain accounts for 60% of JVA's sales. At SOME point, Green Mountain will have to increase purchases by the amount it didn't buy last quarter to rebuild inventories.
2. Coffee prices seem to have bottomed at $1.60 and are increasing. While higher coffee prices hurt JVA last quarter because of item #1, it will become a benefit when JVA is able to sell coffee at the higher prices.
3. GMCR signed a deal with Subway to put it's coffee in 30,000 Subway stores. Since JVA gets 60% of it's sales from GMCR, that deal can only help JVA when GMCR has to increase it's purchases to put coffee in every Subway.
4. After one investor dumped 60,000 shares as a market sell order one minute after the Malaysia airplane crash and caused the stock to fall 12% in one second, the price never recovered. It has been my experience that a plane crash in a far away land doesn't impact coffee consumption.
5. JVA has touched the bottom at $5.85-ish which the Fibonacci experts follow. They are now saying that is the bottom and the projected price target is now $9.60. This chart pattern has many followers and if JVA proves it can start going back, this theory will gain momentum and the traders that follow it will take long positions.
6. Short interest has fallen rapidly and consistently and is now the lowest in at least 13 months, perhaps much more (I can only see the last 12 months of data). There has to be a reason why short sellers are covering so quickly
But the stock has been falling for 7 straight weeks for no reason. The short interest continues to drop dramatically during this time which means SOMEONE is scrambling to cover their shares. Coffee prices rebounded sharply last week and JVA usually follows sharp moves in coffee prices but lags by a couple of weeks to as much as a month before doing so.
My contention is that the stock specialist is responsible for dropping the price so that someone, perhaps the specialist himself, can cover their shorts for a profit. Once they are done, he will let the price of JVA go significantly higher. Right now, nothing is making much sense other than my theory as to why it's happening. A correction to the upside is long overdue.
Updated short interest shows it continues to plummet. Shorts are fleeing yet stock price continues to drop. I maintain that the stock price is getting ready to shoot higher. What is currently happening makes absolutely no sense. Is the stock specialist purposely dropping the price and loading up on shares himself to profit when he allows the stock to shoot up?
Daniel Dwyer has never bought more than 1,000 shares at a time. The last 2 times he bought "a used KIA", JVA went up 50% both times, once in only 2 weeks and once in 2 months. That is a fact and I will not ignore the fact that he bought this time because his history shows that the stock soars soon after he makes small insider buys.
It doesn't make any sense, and your thinking is along the same as mine. This stock is priced for absolute failure despite not having any all year. Short interest is the lowest it's been in well over a year which makes it even more of a mystery.
The bottom it made the other day when it tanked because of the downed Malaysian airplane triggered the exact bottom as predicted by Fibonacci followers. They are now projecting the stock to head back up around $10. The insider that bought the other day has always seemed to buy just before the stock catches fire. JVA also lags coffee price performance by a couple of weeks and it was a week ago that coffee has made a rather dramatic rebound from it's lows. Perhaps this is just the stock specialist playing games and accumulating for their own personal wealth before letting the stock run.
My expectations are that the stock will have a miraculous rebound to the upside in a short period of time. That would only bring it back to fair value, nothing has changed since the stock was $8.20 other than speculation about hedging losses that haven't even happened yet, if they even happen at all.
I had noticed months ago that JVA's stock price lags whatever the price of coffee does. I think it was about 2 weeks. Coffee has rebounded off it's low the past 7 days and JVA has formed it's low. JVA should rebound this week, strongly in fact, if the lag factor I noticed in the past will continue this time.
Yes, I caught that when I first saw it. It should be an (A). I went through his buys/sells, he owned 1,000 shares before this transaction and 2,000 after it. It must be a typo on the Form 4, rare but I've seen it happen. Everywhere else it's been reported as a buy and I did a search on his previous filings and his holdings increased after this transaction.
Level 2 is going crazy this morning even though not a lot of shares have traded hands yet. Not sure what it means but my guess is they are getting ready to start moving it back up as this bottom is solidified. Wild morning on level 2 quotes though.
The insider that bought JVA shares last week should be followed. I went back over his history. When he buys shares, JVA has risen 50% in days and weeks following his buys. The last 2 times he purchased shares, JVA went up 50% in almost 2 weeks and the other time it went up 50% in 2 months. He's not active, he's only bought shares previously in 2011 and 2007 but both times it was a precursor to the stock going way up shortly thereafter.
He has bought again on July 18th. Historically, this has been a good sign.
July 23, 2014
Fresh Brazil crop fears send coffee price soaring
"Arabica coffee futures jump, after an FCStone field trip reveals hefty damage to this year's crop from drought - and warns next year could be worse."
What this means is a possible coffee shortage next year, which would send prices soaring. Coffee majors HAVE to buy beans at some point. High prices will translate to high profits at JVA. The reason for lower sales last quarter is that coffee houses held off on their purchases HOPING prices would fall. Well, after this news, I sense a renewed bull market in coffee is starting to happen. I think JVA will start to benefit from higher prices now where they were unable to take advantage last quarter.
This explains why coffee is soaring. Sorry, JVA shorts. Green Mountain may have held off purchases last quarter due to high coffee prices but eventually they will have to buy. If coffee production in brazil is down by 33% due to the drought, coffee prices are going to go a lot higher. When GMCR does buy, they will have to pay higher prices and JVA's margins will go up. They will also register hedging gains.
Only a matter of days before JVA catches fire imo.
JVA's stock is overdue for a large move up. WIth coffee now flying, JVA should increasingly be under buying pressure. Green Mountain cannot hold off on purchasing coffee forever. Eventually they will have to cave and when they do, they will have to buy more than normal to refill their depleted inventories.
Up almost 6% today, near $1.78. Well off the $1.60 lows recently. JVA stock is priced for a large hedging loss this quarter. That may still happen but with coffee prices rising, there may not be a loss at all depending on what their strategy has been.
Oil may get a boost on Thursday when the EU imposes further sanctions against Russia. This time they may initiate or at least threaten to initiate measures against their energy sector. Europe has held off on doing this because sanctions against Russia's oil assets would be painful for both sides. However, current sanctions are not working and the EU is considering more painful options.
Someone bought a block of about 30,000 shares of FPP in a 1 second period at 1:30PM EST. They were buys because the price increased as a result of the trade. More than $150,000.
Here are the trades.
13:26:10 5.21 5000 EDGA
13:26:10 5.21 5000 EDGA
13:26:09 5.21 5000 EDGA
13:26:08 5.21 100 EDGA
13:25:58 5.11 5000 EDGA
13:25:58 5.11 5000 EDGA
13:25:58 5.11 5000 EDGA
13:25:57 5.11 100 EDGA
I have no idea. All I know is the stock wasn't manipulated today, I didn't even notice the heavy volume until you mentioned it.
There were 30,000 shares traded in a single 5 minute period around 1:30 pm EST according to my charts.
To the person that gave me a thumbs down. Look at the facts. The stock was trading around $5.19 for hours into the close. Why all of a sudden would someone place a market order to sell 100 shares at the close? We already talked about this.
There's only 3 reasons why you would place a market order to sell when you could have sold the entire day at higher prices:
1. You are purposely trying to lose money
2. You are shorting the stock
3. You are about to make a bid to buy the company and a lower stock price saves you millions of dollars buying the company
We already know the short interest is very low. Nobody is making any money shorting this stock. That leaves choices #1 and #3. Unless we have an idiot in our midst, nobody in their right mind would be selling at below market prices on purpose because that means they would be trying to lose money on purpose.
I still maintain that what is happening is #3. I have seen this happen in a low float stock one other time and that company WAS bought out just like I had suspected was happening all along.
Look at the final trades and somebody purposely placed a trade to make the stock finish the day as low as possible.
to drive the price down to $5.10. I don't care what anybody says, this stock is still under fierce manipulation. Just because it stopped for 3 days last week, it's started again. I saw it happening all day with a big exclamation #$%$ at the close.