Drought in Brazil has sent coffee prices soaring, and the May futures look like they’re about to pop for a further gain of $10 (see inset). Trading a move this far advanced will require the utmost caution, even for those using the ‘camouflage’ entry technique, since tension between bulls and bears is at a maximum. Starbuck’s, meanwhile, could reap its just desserts, since the ubiquitous chain never deigned to lower the price of a cup of joe when bean prices were plummeting by two-thirds from May 2011 to November 2013. The vendor’s margins are undoubtedly about to get squeezed, since they won’t dare raise prices commensurately with the explosive rally in bean prices.
