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Talk of the overbought short-term technical condition of the market plus global economic concerns which have sparked long liquidation selling in many markets helped to pressure coffee overnight. The coffee market has continued to climb higher, as the near-term situation continues to outweigh the longer-term outlook. May coffee was able to reach new high ground for the third session in a row yesterday and continues to reach up towards price levels not seen since the summer of 1997. Tight near-term supplies continue to be the main factor that drives prices up into new high ground, with reports that producers in Vietnam continue to hold coffee beans in anticipation of even higher prices adding to the positive tone for prices. This support may have been instrumental in coffee prices avoiding the type of washout that other commodity markets went through during the session yesterday. A recovery in the Dollar may have helped to take prices off of their highs later on during the session. While average cash prices for coffee in Kenya have risen since last week, prices for the top-level “AA” coffee have declined over that period. There has been some longer-term forecast calling for a drought in Vietnamese production areas, but there have been few regions around the globe that are projected to have production issue over the next crop year. ICE certified coffee stocks were down 875 bags to 1.601 million with 12,683 bags pending review.
TODAY’S GUIDANCE: Higher energy prices is having an impact on most markets if only to spark a short-term long liquidation trend out of agriculture commodities. It may take a sense of strong global growth to see the market take a run at the 1997 highs but outside market forces look too weak for now.
TODAY’S MARKET IDEAS: May coffee selling resistance is at 274.80 with support back at 259.35. Look for the market to correct the overbought condition.
Coffee: Outside Market Forces Too Weak For Now
by Terry Roggensack on February 23, 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!
Talk of the overbought short-term technical condition of the market plus global economic concerns which have sparked long liquidation selling in many markets helped to pressure coffee overnight. The coffee market has continued to climb higher, as the near-term situation continues to outweigh the longer-term outlook. May coffee was able to reach new high ground for the third session in a row yesterday and continues to reach up towards price levels not seen since the summer of 1997. Tight near-term supplies continue to be the main factor that drives prices up into new high ground, with reports that producers in Vietnam continue to hold coffee beans in anticipation of even higher prices adding to the positive tone for prices. This support may have been instrumental in coffee prices avoiding the type of washout that other commodity markets went through during the session yesterday. A recovery in the Dollar may have helped to take prices off of their highs later on during the session. While average cash prices for coffee in Kenya have risen since last week, prices for the top-level “AA” coffee have declined over that period. There has been some longer-term forecast calling for a drought in Vietnamese production areas, but there have been few regions around the globe that are projected to have production issue over the next crop year. ICE certified coffee stocks were down 875 bags to 1.601 million with 12,683 bags pending review.
TODAY’S GUIDANCE: Higher energy prices is having an impact on most markets if only to spark a short-term long liquidation trend out of agriculture commodities. It may take a sense of strong global growth to see the market take a run at the 1997 highs but outside market forces look too weak for now.
TODAY’S MARKET IDEAS: May coffee selling resistance is at 274.80 with support back at 259.35. Look for the market to correct the overbought condition.
Tags: Coffee, Softs
About Terry Roggensack