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The technical action is bearish and the market acts like it wants to make another leg down. However, the short-term cash fundamentals do not seem to point to lower prices until there is more certainty that there will be a bumper crop from Brazil this summer. Ideas that the sugar and coffee crops from Brazil for the 2010 season are doing well and that this will help ease any tightness in the world market helped to pressure. The Colombia National Federation of Coffee Growers indicated at production in the first half of the year should reach 5.156 million bags, up 22% from last year. This outlook clashes with trader expectations that Colombia coffee production will struggle to exceed last year’s level. El Nino dryness has already impacted production in January which was 515,000 bags, down 41% from last year and the lowest January production from Colombia in 34 years. May coffee traded sharply lower on the session and experienced the lowest close since February 5th. The market saw choppy to lower trade early in the session but when the sugar market saw a significant sell-off, coffee pushed under Friday’s lows and this sparked sell-stops and further technical selling. Funds were noted sellers on the session in coffee and soft markets in general which helped to pressure. Robusta futures pushed to a new 8-month low which added to the bearish tone. Vietnam cash markets are weak and traders appear un-concerned with developing dryness in some of the key growing regions. Concerns that the strong dollar, weak Brazilian currency trend will continue has added to the bearish tone. Daily ICE certified deliverable coffee stocks were down 4,985 bags yesterday to a 7-year low of 2.818 million with 29,171 bags pending review. This is the 6th session in a row in which stocks fell moderately and the movement could begin to provide some underlying support.
TODAY’S GUIDANCE: May coffee support is at the 130.90-130.35 zone with 139.50 and 141.70 as next key resistance points. If support can not hold, 127.70 becomes next downside count.
TODAY’S MARKET IDEAS: For now, assume support will hold and that we will see an eventual test of the 140.00 level.
Coffee Market Commentary – 2010.02.23
by Terry Roggensack on February 23, 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!
The technical action is bearish and the market acts like it wants to make another leg down. However, the short-term cash fundamentals do not seem to point to lower prices until there is more certainty that there will be a bumper crop from Brazil this summer. Ideas that the sugar and coffee crops from Brazil for the 2010 season are doing well and that this will help ease any tightness in the world market helped to pressure. The Colombia National Federation of Coffee Growers indicated at production in the first half of the year should reach 5.156 million bags, up 22% from last year. This outlook clashes with trader expectations that Colombia coffee production will struggle to exceed last year’s level. El Nino dryness has already impacted production in January which was 515,000 bags, down 41% from last year and the lowest January production from Colombia in 34 years. May coffee traded sharply lower on the session and experienced the lowest close since February 5th. The market saw choppy to lower trade early in the session but when the sugar market saw a significant sell-off, coffee pushed under Friday’s lows and this sparked sell-stops and further technical selling. Funds were noted sellers on the session in coffee and soft markets in general which helped to pressure. Robusta futures pushed to a new 8-month low which added to the bearish tone. Vietnam cash markets are weak and traders appear un-concerned with developing dryness in some of the key growing regions. Concerns that the strong dollar, weak Brazilian currency trend will continue has added to the bearish tone. Daily ICE certified deliverable coffee stocks were down 4,985 bags yesterday to a 7-year low of 2.818 million with 29,171 bags pending review. This is the 6th session in a row in which stocks fell moderately and the movement could begin to provide some underlying support.
TODAY’S GUIDANCE: May coffee support is at the 130.90-130.35 zone with 139.50 and 141.70 as next key resistance points. If support can not hold, 127.70 becomes next downside count.
TODAY’S MARKET IDEAS: For now, assume support will hold and that we will see an eventual test of the 140.00 level.
Tags: Coffee, Softs
About Terry Roggensack