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The market seems poised for a resumption of the uptrend after reaching the high end of a two-month consolidation. The surge higher in London could attract some increased producer selling ahead but at least the issue of defaults from Vietnam exporters should subside. Rains have delayed the harvest in Indonesia and the lack of producer selling in Vietnam has left many exporters short on supply to make commitments. Vietnam officials revised exports in February lower and believe that March exports were near 1.83 million bags, down 19.2% from last year. This pushed six month cumulative exports to 10.16 million bags, down 9.2% from last year’s pace. May coffee was able to extend this week’s rally yesterday as the market moved toward the highs for the past several months. Calmer trading in the Dollar along with continued problems with export defaults in Vietnam gave the market some support. A reduced forecast for production in Guatemala, partially due to lower rainfall and less fertilizer usage, could point to other countries in that area having difficulties with this season’s crop as well. London July coffee surged 4.4% to close at the highest level since February 3rd. Daily ICE certified deliverable coffee stocks were down 53,003 bags to 2.612 million with 74,332 bags pending review. Uncertainty on the quality of the Brazil crop and a continued slow recovery of production from Colombia may cause the market to build a minor weather premium ahead of the Brazil harvest.
TODAY’S GUIDANCE: The improving technical action and a sense that fund traders are searching for commodity markets which might see some supply tightness ahead indicates that the coffee market could benefit from any shift back toward the commodity sector if the dollar begins to retreat.
Coffee Market Commentary – 2010.03.25
by Terry Roggensack on March 26, 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 market seems poised for a resumption of the uptrend after reaching the high end of a two-month consolidation. The surge higher in London could attract some increased producer selling ahead but at least the issue of defaults from Vietnam exporters should subside. Rains have delayed the harvest in Indonesia and the lack of producer selling in Vietnam has left many exporters short on supply to make commitments. Vietnam officials revised exports in February lower and believe that March exports were near 1.83 million bags, down 19.2% from last year. This pushed six month cumulative exports to 10.16 million bags, down 9.2% from last year’s pace. May coffee was able to extend this week’s rally yesterday as the market moved toward the highs for the past several months. Calmer trading in the Dollar along with continued problems with export defaults in Vietnam gave the market some support. A reduced forecast for production in Guatemala, partially due to lower rainfall and less fertilizer usage, could point to other countries in that area having difficulties with this season’s crop as well. London July coffee surged 4.4% to close at the highest level since February 3rd. Daily ICE certified deliverable coffee stocks were down 53,003 bags to 2.612 million with 74,332 bags pending review. Uncertainty on the quality of the Brazil crop and a continued slow recovery of production from Colombia may cause the market to build a minor weather premium ahead of the Brazil harvest.
TODAY’S GUIDANCE: The improving technical action and a sense that fund traders are searching for commodity markets which might see some supply tightness ahead indicates that the coffee market could benefit from any shift back toward the commodity sector if the dollar begins to retreat.
Tags: Coffee, Softs
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