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While the coffee market could not return towards the recent highs yesterday, prices were able to avoid losing further ground during this week’s overall commodity weakness. July coffee was unable to take advantage of a weak Dollar and could only finish the session with a minimal gain. While trading was choppy and volatile, prices were able to remain close to last week’s highs for the move. Tight coffee stocks in Europe and North America continue to be the main supportive factors for the market, but coffee prices could not overcome broad-based pressure on commodities in front of the FOMC meeting. There are indications that recent heavy rains in Vietnam may have a negative impact on coffee production during the 2011/12 season. The CEO of major coffee retailer Starbucks said that the current rally in coffee prices was not sustainable. ICE exchange coffee stocks were up 5,300 bags to 1.581 million, with 53,614 bags pending review.
TODAY’S GUIDANCE: July coffee is making an early run at the highs for this rally but may need further support from the supply/demand side to reach new high ground this morning. Given that producers are still showing some reluctance to part with their supplies, this current rally may have plenty of upward momentum left.
TODAY’S MARKET IDEAS: The market remains in a steady uptrend, but there are a few factors which are less than ideal. The technical picture could improve if we begin to see a higher open interest trend. Declining open interest is not a good base of support for an extended bull trend. In addition, the RSI divergence is significant and suggests a loss of upside momentum. At the February peak, RSI was 83. At the March peak, RSI was 82 and at the April 20th peak, RSI was 75. Brazil faces an “off” cycle production year, and the world faces a potential production deficit for the coming season. Outside market factors are also bullish. Uptrend channel support for July coffee comes in at 291.15 today, with some light chart support at 297.00. A resumption of the uptrend leaves 308.45 and 313.95 as the next upside objectives.
Coffee: Steady Uptrend, but All Is Not Perfect
by Terry Roggensack on April 28, 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!
While the coffee market could not return towards the recent highs yesterday, prices were able to avoid losing further ground during this week’s overall commodity weakness. July coffee was unable to take advantage of a weak Dollar and could only finish the session with a minimal gain. While trading was choppy and volatile, prices were able to remain close to last week’s highs for the move. Tight coffee stocks in Europe and North America continue to be the main supportive factors for the market, but coffee prices could not overcome broad-based pressure on commodities in front of the FOMC meeting. There are indications that recent heavy rains in Vietnam may have a negative impact on coffee production during the 2011/12 season. The CEO of major coffee retailer Starbucks said that the current rally in coffee prices was not sustainable. ICE exchange coffee stocks were up 5,300 bags to 1.581 million, with 53,614 bags pending review.
TODAY’S GUIDANCE: July coffee is making an early run at the highs for this rally but may need further support from the supply/demand side to reach new high ground this morning. Given that producers are still showing some reluctance to part with their supplies, this current rally may have plenty of upward momentum left.
TODAY’S MARKET IDEAS: The market remains in a steady uptrend, but there are a few factors which are less than ideal. The technical picture could improve if we begin to see a higher open interest trend. Declining open interest is not a good base of support for an extended bull trend. In addition, the RSI divergence is significant and suggests a loss of upside momentum. At the February peak, RSI was 83. At the March peak, RSI was 82 and at the April 20th peak, RSI was 75. Brazil faces an “off” cycle production year, and the world faces a potential production deficit for the coming season. Outside market factors are also bullish. Uptrend channel support for July coffee comes in at 291.15 today, with some light chart support at 297.00. A resumption of the uptrend leaves 308.45 and 313.95 as the next upside objectives.
Tags: Coffee, Softs
About Terry Roggensack