Michael Covel

The ominous headline from Barrons reads:

Coffee Jitters: Brazil weather watch under way

The article states:

“It’s springtime in Brazil and dry weather, not frost, is the biggest threat to the nation’s coffee production. In the winter, any mention of chilly weather can roil coffee futures, but since groves were moved north (closer to the Equator) in the last decade or so and out of the frost belt, growers’ worries over frost damage have been superseded by drought concerns. After an upward jolt in September, coffee futures on the New York Board of Trade slipped in early October as traders responded to wet-weather forecasts for Brazil’s new crop. “We’re waiting to see if Brazilian groves get enough rain for blooming, and then more to fix the flower and allow buds to grow,” says Rodrigo Costa, a trader with Fimat USA. “September was very dry, but October is usually a rainy period.” Brazilian trees flower in October and November. A front bringing needed rain to groves should arrive Oct. 11-14, according to the local Somar service. “We’re in volatile weather trading now, and the market’s especially sensitive since the next Brazilian crop is expected to be smaller based on the tree cycle,” Costa says.

If you were to rely on this type of analysis or if you were to gain this level of fundamental expertise in Brazilian coffee yourself…how exactly would it help to trade the coffee market for profit?

The best traders don’t use weather analysis for buy and sell signals.