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The market is still operating under the negative technical influence of the June 21st reversal. The jump in open interest, however, is seen as a bullish technical development this week and shows a willingness of traders to buy in spite of the overbought technical condition. Tightness in deliverable supply and the premium of high quality coffee above the futures are factors which may be forcing more commercial buyers into long positions in futures. This set-up is a temporary but positive set-up and could continue to provide underlying support. Weather is near ideal for harvest in Brazil with dry conditions expected in the next week and no sign of any cold threatening weather. September coffee was able to recover from early weakness yesterday, but could not hold onto the recovery and ended the day with a small loss. Increased sales and higher prices from Vietnam recently have led to projections of export coffee shortages for than nation during September and October which is just ahead of their new crop harvest which is expected to be larger than last year. ICE certified coffee stocks for the day were up 1,451 bags to 2.251 million with zero bags pending review. Stocks at the end of June 2009 were 3.6271 million bags. Colombia has had two poor crop seasons in a row and they have been trading at a significant premium to the futures for much of the past two years, but it took tightening deliverable stocks in London to force the market higher.
TODAY’S GUIDANCE: The market is staring at a very large Brazil crop which is expected to drive world production well past world consumption for the coming year. However, Brazil is not deliverable and higher quality Colombia and Central American coffees still hold a stiff premium. A minor bounce in deliverable stocks yesterday should be a concern for the bulls but the increase was small and traders will continue to monitor deliverable stocks movement for direction. New highs for the move (if this occurs) would negate the reversal and leave 169.60 as next upside target. However, Monday’s reversal leaves the market vulnerable to some back-and-fill action with first good support all the way back at 153.55.
TODAY’S MARKET IDEAS: Stand aside for now.
Coffee Market Commentary – 2010.06.23
by Terry Roggensack on June 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 market is still operating under the negative technical influence of the June 21st reversal. The jump in open interest, however, is seen as a bullish technical development this week and shows a willingness of traders to buy in spite of the overbought technical condition. Tightness in deliverable supply and the premium of high quality coffee above the futures are factors which may be forcing more commercial buyers into long positions in futures. This set-up is a temporary but positive set-up and could continue to provide underlying support. Weather is near ideal for harvest in Brazil with dry conditions expected in the next week and no sign of any cold threatening weather. September coffee was able to recover from early weakness yesterday, but could not hold onto the recovery and ended the day with a small loss. Increased sales and higher prices from Vietnam recently have led to projections of export coffee shortages for than nation during September and October which is just ahead of their new crop harvest which is expected to be larger than last year. ICE certified coffee stocks for the day were up 1,451 bags to 2.251 million with zero bags pending review. Stocks at the end of June 2009 were 3.6271 million bags. Colombia has had two poor crop seasons in a row and they have been trading at a significant premium to the futures for much of the past two years, but it took tightening deliverable stocks in London to force the market higher.
TODAY’S GUIDANCE: The market is staring at a very large Brazil crop which is expected to drive world production well past world consumption for the coming year. However, Brazil is not deliverable and higher quality Colombia and Central American coffees still hold a stiff premium. A minor bounce in deliverable stocks yesterday should be a concern for the bulls but the increase was small and traders will continue to monitor deliverable stocks movement for direction. New highs for the move (if this occurs) would negate the reversal and leave 169.60 as next upside target. However, Monday’s reversal leaves the market vulnerable to some back-and-fill action with first good support all the way back at 153.55.
TODAY’S MARKET IDEAS: Stand aside for now.
Tags: Coffee, Softs
About Terry Roggensack