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A further decline in exchange stocks and weakness in the US dollar overnight helped spark a bounce. Fears of managed money long liquidation selling has helped to pressure the market as the Administration proposals cast a negative tone on speculation and increased the risk of selling. Uncertainty leads to backpedaling and this means selling pressure potential for many commodity markets. Keep in mind; index funds held a net long position of 56,673 contracts as of January 12th and hedge funds (trend-following funds) were net long more than 18,000 contracts. March coffee closed 50 lower on the session yesterday but up 115 points from the mid-session lows. Weakness in the stock market and many other commodity markets and talk of ample supply from Vietnam pressuring the London coffee futures helped spark long liquidation selling. The market pushed to the lowest level since January 4th on continued weak technical action in spite of declining exchange stocks and stiff premiums of cash to futures for some coffees. Colombia coffee growers expect to produce near 11 million bags this year after seeing the lowest crop in 33 years in 2009 at just 7.8 million bags. In 2008, Colombia produced 11.4 million bags. The Mexico agriculture minister indicated that the crop for this season will likely fall 10-14% from 4.6 million bags produced last year due to recent cold weather among other factors. Coffee exports in December for Central America, Mexico, Colombia, Peru and the Dominican Republic were 1.776 million bags (down 8%) which pushed cumulative exports for the season so far (3 months) to 4.357 million bags, down 23.8% from last year’s pace. Daily ICE certified deliverable coffee stocks were down 24,341 bags to 2.978 million with 41,764 bags pending review. Stocks are at a 7-year low.
TODAY’S GUIDANCE: The market seems to have the short-term fundamentals to move higher but the technical action remains weak. Support for March coffee comes in at 138.20 and 136.55 with 141.15 and 142.30 as resistance. The 100-day moving average may also provide some support today at 138.70.
Coffee Market Commentary – 2010.01.22
by Terry Roggensack on January 22, 2010
Below is a sample of our Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!
A further decline in exchange stocks and weakness in the US dollar overnight helped spark a bounce. Fears of managed money long liquidation selling has helped to pressure the market as the Administration proposals cast a negative tone on speculation and increased the risk of selling. Uncertainty leads to backpedaling and this means selling pressure potential for many commodity markets. Keep in mind; index funds held a net long position of 56,673 contracts as of January 12th and hedge funds (trend-following funds) were net long more than 18,000 contracts. March coffee closed 50 lower on the session yesterday but up 115 points from the mid-session lows. Weakness in the stock market and many other commodity markets and talk of ample supply from Vietnam pressuring the London coffee futures helped spark long liquidation selling. The market pushed to the lowest level since January 4th on continued weak technical action in spite of declining exchange stocks and stiff premiums of cash to futures for some coffees. Colombia coffee growers expect to produce near 11 million bags this year after seeing the lowest crop in 33 years in 2009 at just 7.8 million bags. In 2008, Colombia produced 11.4 million bags. The Mexico agriculture minister indicated that the crop for this season will likely fall 10-14% from 4.6 million bags produced last year due to recent cold weather among other factors. Coffee exports in December for Central America, Mexico, Colombia, Peru and the Dominican Republic were 1.776 million bags (down 8%) which pushed cumulative exports for the season so far (3 months) to 4.357 million bags, down 23.8% from last year’s pace. Daily ICE certified deliverable coffee stocks were down 24,341 bags to 2.978 million with 41,764 bags pending review. Stocks are at a 7-year low.
TODAY’S GUIDANCE: The market seems to have the short-term fundamentals to move higher but the technical action remains weak. Support for March coffee comes in at 138.20 and 136.55 with 141.15 and 142.30 as resistance. The 100-day moving average may also provide some support today at 138.70.
Tags: Coffee, Softs
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