Continuing to monitor the Arabica Coffee futures estimating that prices will not be able to trade significantly above the 194 level. This may be a great time to increase short exposure to Coffee futures via lower risk positions in the spread market. Coffee prices may need to fall much further in order to initiate absorption of excess stocks and stimulate reduced output. Coffee continues to trade in a moderate contango. True worries about physical supply should cause coffee to move into a backwardation market which is unlikely. Now may be a good time to begin positioning short on Arabica Coffee futures.

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