What will Coffee do ?

What will Coffee do ?

We have been seeing a consistent rise in sugar stocks off late this year due to pickup of prices in the underlying commodity - Sugar. Similar performance can be done by Coffee because the news coming out is not very good for the crop this year.

Brazil - The largest producer of coffee is facing El Nino effect and the crop production has been downgraded this year.

Vietnam- the 2nd largest producer of coffee can see a severe drought this year.

These 2 countries contribute to approx 50% of production among the top 5 Coffee producing nations.

Now coming to the Coffee Charts - The prices have been in a downward sloping trend-line since last year. But now are at a level of 120 and ready to move past the trend-line.

When the underline commodity prices will see a change of trend then the stock prices will also show a uptick for the companies that are producing it. Once the trend sets in, we can see huge upside as the coffee prices have been in a downtrend for a very long time now.

I have a positive view on Tata Coffee going by the above points. I will be posting the charts of the stock whenever it shows a breakout.

Update: 9th March 2016

International Coffee prices breaks 200 DMA on upside after a long period of time. Lets wait for the confirmation in days to come. Today is the first intraday level being touched.

Disc: No Personal Holding, its not a recommendation.

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