Trading vs. Reality

I found myself reading about coffee futures this morning. I heard coffee futures hit a 7-year high. Even the TradingView Twitter account was tweeting about it:

Obviously a lot of people drink coffee and enjoy their morning coffee. So I was pretty interested in learning more about this move. Hey, if coffee increases in price, a lot of people could feel that. A 25 cent increase a day makes a fairly big impact globally. The numbers add up quick.

The problem, though, was that after doing some research, all I saw was coffee at hilariously low prices. I even found bags of coffee for $5.99 on Amazon and other places for equal prices or less. I also am in the process of calling my local supermarket just to ask what the average bag is going for:

How does this happen – how are coffee futures climbing rapidly, but prices actually staying flat or going down? Well, it’s a lot like the lumber move earlier in the year. In the case of lumber there was more demand for lumber trading than any actual realistic spike or long-term demand in lumber long-term. I’ll just leave this here:

So anyways, what a nice reminder about how there really is a difference between what traders are doing and what the reality of the situation is. There is literally more demand for coffee futures trading right now than there is for actual coffee consumption in stores. Knowing the difference between these two things is where you outperform.

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