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The coffee market turned sharply towards the upside yesterday, breaking decisively out of the 2011 trading range and quickly reaching new contract highs. March coffee finished the session with large gains while reaching its highest price levels since the summer of 1997. The main source of strength for the coffee market remains tight near-term supplies, as slow sales in Vietnam have led to the highest cash prices there in close to three years. The International Coffee Organization raised its estimate for Vietnam’s production to 18 million bags, which is still down 1.1% from last year but up from their previous estimate of 17.5 million bags. Reports that sales of Kenyan coffee had more than doubled during the 4th quarter of 2010 are thought to be a good indicator of how tight supplies of Arabica coffee have become. A steep sell-off in the Dollar has also added to support for coffee as well as for other commodity markets. The International Coffee Organization lifted their estimate for global coffee production during the 2010/11 crop year by 1.6 million bags to 134.6 million, due mainly to improving growing conditions for African producers. Although March coffee finished with a new high close, a settlement price nearly 4 cents off of the day’s high may indicate a lack of conviction with this current rally. Given that prices are making new 13-year highs without any major headline-generating supply problems, however, further volatile trading is likely to occur during the next few weeks. ICE certified coffee stocks were down 3,150 bags to 1.681 million, with 1,250 bags pending review.
TODAY’S GUIDANCE: Open interest declining in recent days is not too reassuring to the bulls, but the trend is up and there is little chart resistance overhead. In addition, an inflationary tone to agricultural markets continues.
TODAY’S MARKET IDEAS: The technical action improves with the upside breakout yesterday,
which leaves 147.40 as next swing objective for March coffee with support at 237.05.
Coffee Market Commentary – 2011.01.13
by Terry Roggensack on January 13, 2011
Below is a sample of The Hightower Report’s 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 coffee market turned sharply towards the upside yesterday, breaking decisively out of the 2011 trading range and quickly reaching new contract highs. March coffee finished the session with large gains while reaching its highest price levels since the summer of 1997. The main source of strength for the coffee market remains tight near-term supplies, as slow sales in Vietnam have led to the highest cash prices there in close to three years. The International Coffee Organization raised its estimate for Vietnam’s production to 18 million bags, which is still down 1.1% from last year but up from their previous estimate of 17.5 million bags. Reports that sales of Kenyan coffee had more than doubled during the 4th quarter of 2010 are thought to be a good indicator of how tight supplies of Arabica coffee have become. A steep sell-off in the Dollar has also added to support for coffee as well as for other commodity markets. The International Coffee Organization lifted their estimate for global coffee production during the 2010/11 crop year by 1.6 million bags to 134.6 million, due mainly to improving growing conditions for African producers. Although March coffee finished with a new high close, a settlement price nearly 4 cents off of the day’s high may indicate a lack of conviction with this current rally. Given that prices are making new 13-year highs without any major headline-generating supply problems, however, further volatile trading is likely to occur during the next few weeks. ICE certified coffee stocks were down 3,150 bags to 1.681 million, with 1,250 bags pending review.
TODAY’S GUIDANCE: Open interest declining in recent days is not too reassuring to the bulls, but the trend is up and there is little chart resistance overhead. In addition, an inflationary tone to agricultural markets continues.
TODAY’S MARKET IDEAS: The technical action improves with the upside breakout yesterday,
which leaves 147.40 as next swing objective for March coffee with support at 237.05.
Tags: Coffee, Softs
About Terry Roggensack