Futures Roundup

Lack of Brazilian Exports Bogs Down Coffee

    Fundamentals
Soft demand has plagued the Coffee market, resulting in prices trading at their lowest level in over a month. Export demand from Brazil has been very lackluster, despite the record harvest there. Storms in Brazil were expected to damage crops, however, the actual damage was far less than forecast.

Vietnam is facing dryer, warmer weather than previously expected, which has bolstered cash market prices in the country. On a global scale, the worsening Vietnamese weather has taken a back seat to ideal growing conditions in Brazil. Brazilian flowering has been very good so far, which should be aided by moderate temperatures and moisture.

   Technical Notes
Turning to the chart, we see the December Coffee contract approaching support at the 160.00 level. If Coffee is unable to hold 160.00, the next area of support can be found near 154.00, which can be seen as critical. The price action over the past several months has seen prices tightening, forming a wedge formation. The range is still relatively wide, suggesting prices could continue to trade sideways and tighten further before breaking out. The recent 20-cent drop has resulted in the RSI approaching oversold territory, which may be supportive of prices in the near-term.

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About Mike Zarembski

Born in the grain pits of the Mid-America Commodity Exchange (MidAm) in the early 1990s, Mike's futures career soon shifted to the offices of TD Waterhouse in 1999, followed by Xpresstrade in 2002 and eventually optionsXpress in 2007.