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Friday, March 22, 2013

When it comes to coffee, at this point all that matters is Brazil

Well, the JO crowd finished the week on a positive note. But the bears are still in charge when it comes to coffee. As I have said before, we can pick apart what is going along across the globe but it looks like as Brazil coffee farmers go, so goes coffee futures pricing. Here's today's post on coffee from one of our trading partners Mike Seery......

Coffee futures finished this Friday afternoon on a positive note closing at 136 a pound up 200 points for the trading session finishing higher for the 3rd straight day but still right near 2 ½ year lows as the bear market continues finishing down around 100 points for the trading week.

Coffee futures on the daily chart has excellent chart structure so if you are willing to stick your neck out you will be able to place tight stops limiting your monetary loss in case you are wrong and at this point there is still talk of a tremendous crop coming out of Brazil which is keeping a lid on prices despite the fact of rust problems in Central America a bad drought in Vietnam which is reducing their crop forecast but Brazil’s crop could be so huge as traders are unwilling to stick their neck out on the upside at this point.

As I’ve stated in many previous blogs I was bullish coffee and I was wrong, however the longer we start to grind lower like we are at this point with no volatility going into the volatile frost season I still believe if you have deep enough pockets and you are willing to take a longer term view coffee prices I believe will reward you in the long run because I do believe prices will be higher 12 months from now than they are at these depressed levels.

Even producers in Brazil are starting to complain that prices are getting to low and are starting hold back some of their crop eventually that’s what happens with prices get to low and if prices get too high producers often produce too much sending prices lower but at this point prices are so low that production in my opinion will start to decrease.

Coffee trend? Lower. Chart structure? excellent.

We remain long coffee using ETF "JO"

Click here to get your own free trend analysis for coffee ETF "JO" in your inbox.

1 comment:

Ray @ The Crude Oil Trader said...

May coffee closed higher due to short covering on Monday as it consolidates some of this winter's decline. The mid-range close set the stage for a steady opening on Tuesday. Stochastics and the RSI are oversold but are turning bullish hinting that a low might be in or is near. Closes above the 20-day moving average crossing at 13.99 would confirm that a short-term low has been posted. If May renews the decline off January's high, weekly support crossing at 13.20 is the next downside target.