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Colder than normal weather in the forecast for early next week has helped support the market recently. While there are no damaging temperatures in the forecast, the market is also finding some support from the idea that cold weather is here early this season. While a frost could certainly cause significant damage to the crop, Brazil production is expected to come in near 55.3 million bags (USDA attache) which is up 23% from last year. Brazil is far and away the world’s largest producer. Absorbing this crop will be a difficult task and prices may need to stay low enough to spark strong demand. July coffee was able to recover from early losses yesterday, but could not find enough strength to make another run at this week’s highs. Weather forecasts for Brazilian production areas call for colder weather in the early part of next week, but the chances for a damaging freeze remains small.
Early reports from Guatemala indicate that many coffee production areas in that nation were spared heavy damage from Tropical Storm Agatha. On top of a bumper Brazil harvest, the improving production outlook for Colombia and Vietnam for the coming season has added to the bearish supply tone. It will take time to determine damage in Guatemala and Honduras but many traders seem to believe the impact on world production will be minor. ICE certified coffee stocks for the day were down 14,154 bags to 2.304 million with 4,920 bags pending review.
TODAY’S GUIDANCE: Colder than normal temperatures in Brazil have encouraged shorts to exit and may have sparked some increased coverage from end users but without frost damage in the forecast early next week, we could see some long liquidation selling. Open interest was down 1,311 contracts to 136,232 and this is down from 138,579 contracts on May 20th when the market appeared set to break-out to the downside. Close-in resistance for September coffee is at 137.80 and 138.15 with 135.60 and 134.65 support. Look for an eventual move under the May lows.
Coffee Market Commentary – 2010.06.04
by Terry Roggensack on June 4, 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!
Colder than normal weather in the forecast for early next week has helped support the market recently. While there are no damaging temperatures in the forecast, the market is also finding some support from the idea that cold weather is here early this season. While a frost could certainly cause significant damage to the crop, Brazil production is expected to come in near 55.3 million bags (USDA attache) which is up 23% from last year. Brazil is far and away the world’s largest producer. Absorbing this crop will be a difficult task and prices may need to stay low enough to spark strong demand. July coffee was able to recover from early losses yesterday, but could not find enough strength to make another run at this week’s highs. Weather forecasts for Brazilian production areas call for colder weather in the early part of next week, but the chances for a damaging freeze remains small.
Early reports from Guatemala indicate that many coffee production areas in that nation were spared heavy damage from Tropical Storm Agatha. On top of a bumper Brazil harvest, the improving production outlook for Colombia and Vietnam for the coming season has added to the bearish supply tone. It will take time to determine damage in Guatemala and Honduras but many traders seem to believe the impact on world production will be minor. ICE certified coffee stocks for the day were down 14,154 bags to 2.304 million with 4,920 bags pending review.
TODAY’S GUIDANCE: Colder than normal temperatures in Brazil have encouraged shorts to exit and may have sparked some increased coverage from end users but without frost damage in the forecast early next week, we could see some long liquidation selling. Open interest was down 1,311 contracts to 136,232 and this is down from 138,579 contracts on May 20th when the market appeared set to break-out to the downside. Close-in resistance for September coffee is at 137.80 and 138.15 with 135.60 and 134.65 support. Look for an eventual move under the May lows.
Tags: Coffee, Softs
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