"Would very much appreciate your opinion on the following. Back in 1977 coffee prices exploded and I found out that you could buy 5 cups of tea for the price of ONE cup of coffee. The biggest Coffee consumer was and still is the USA -and considering the coffee taste of US coffee- I decided that the switch was imminent. I bought out of the money puts and at random I bought after checking the TEAS list in the Financial Times - no more similar separations between the shares in the FT - I bought the only tea plantations shares bearing an occidental name WARREN PLANTATIONS - inspired by the Warren Report during Nixon's Watergate. I bought on a scale-up basis until the owners asked the Bankers who was behind the buying. To cut a long story short I made a hefty profit selling the tea shares and a small profit selling the coffee put when the switch took place.

"Do you think that history could repeat itself...and if so, considering that Indian tea crops are in danger, which Tea plantations would you buy? And how many cups of tea can you buy today for the price of one cup of coffee in the US and the UK? Sorry to have bothered you with my long story and thanks for your excellent daily reports. "

Eoin Treacy's view Thank you for your kind words and this interesting account. I suspect that the quality of US coffee has improved somewhat with the advent of Starbucks but I could not guess at the relative costs of coffee versus tea.

This inflation-adjusted chart of coffee highlights that despite the recent advance in coffee prices they are still considerably below the 1977 peak. Therefore it is questionable whether substitution is a realistic proposition at today's levels.

Warren Plantations which is listed in India, shares a similar chart pattern with McLeod Russel Plantations and Jayshree Tea & Industries. All rallied impressively during 2009 and have been ranging for more than a year. They will need to hold above their recent lows if the medium-term bullish outlook is to be sustained.

Arabica coffee tested the 300¢ this week and has pulled back sharply from that area. While the short-term progression of higher reaction lows remains intact, prices have become quite overextended relative to the 200-day MA and the risk of a reversion towards the mean has increased considerably.