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The market managed to hold key support on the break Tuesday and while there appears to be a significant top in place, it will be important for the bears to see this support (165.65 September coffee) to be taken out soon. If not, the reversal top and set-back on Tuesday will just look like a correction in the bull trend. September coffee regained upside momentum and moved well away from the recent lows yesterday but prices remain far below Monday’s 12 1/2 year highs. Tight near-term supplies of Colombian coffee have underpinned the market’s recovery, as they point towards the historically low levels for certified deliverable stocks at both the ICE and the LIFFE exchanges. Weather forecasts for Brazilian production areas remain too warm to cause any frost damage and the crop is more than 50% harvested. One of the primary reasons for the surge higher into the August 2nd peak was declining exchange stocks and this is still a potentially supportive force as higher quality deliverable coffee is still in tight supply and in many cases such as Colombia is still priced above the board. A major coffee retailer in the United States raised list prices for several of their brands by an average of 9% and this is higher than normal push in prices and could slow demand but commercial retailers are just adjusting to the higher world price. ICE certified Arabica coffee stocks fell by 1,029 bags to 2.079 million, with 15,879 bags pending review.
TODAY’S GUIDANCE: September coffee resistance comes in at 173.30 and 175.25 with support at 165.65. A decisive move under support will turn the trend down and leave 156.55 and 150.65 as downside objectives.
TODAY’S MARKET IDEAS: We have a slight bearish bias but outside market forces remain strong and exchange stocks are tightening.
Coffee Market Commentary – 2010.08.05
by Terry Roggensack on August 5, 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 managed to hold key support on the break Tuesday and while there appears to be a significant top in place, it will be important for the bears to see this support (165.65 September coffee) to be taken out soon. If not, the reversal top and set-back on Tuesday will just look like a correction in the bull trend. September coffee regained upside momentum and moved well away from the recent lows yesterday but prices remain far below Monday’s 12 1/2 year highs. Tight near-term supplies of Colombian coffee have underpinned the market’s recovery, as they point towards the historically low levels for certified deliverable stocks at both the ICE and the LIFFE exchanges. Weather forecasts for Brazilian production areas remain too warm to cause any frost damage and the crop is more than 50% harvested. One of the primary reasons for the surge higher into the August 2nd peak was declining exchange stocks and this is still a potentially supportive force as higher quality deliverable coffee is still in tight supply and in many cases such as Colombia is still priced above the board. A major coffee retailer in the United States raised list prices for several of their brands by an average of 9% and this is higher than normal push in prices and could slow demand but commercial retailers are just adjusting to the higher world price. ICE certified Arabica coffee stocks fell by 1,029 bags to 2.079 million, with 15,879 bags pending review.
TODAY’S GUIDANCE: September coffee resistance comes in at 173.30 and 175.25 with support at 165.65. A decisive move under support will turn the trend down and leave 156.55 and 150.65 as downside objectives.
TODAY’S MARKET IDEAS: We have a slight bearish bias but outside market forces remain strong and exchange stocks are tightening.
Tags: Coffee, Softs
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