July Coffee Drips On | RJO Futures

May 10, 2017 9:51AM CDT

Much of the price action in July coffee has been sideways, consolidating. However, we can clearly see that July coffee prices are pretty comfortable in the consolidation zone, and have been since rallying on May 1. News from Brazil is that they will allow imports of small Robusta quantities from Vietnam. This comes on the heels of a short-term tight supply, which very well may end upon when upcoming harvest is underway. A slowly falling US Dollar, coupled with the potential for less supply may be the forces that earlier sparked a rally to support to coffee prices. However, the aforementioned sideways price action tells us that the market is now waiting for news. Any news.

On the daily chart of July coffee below, we can see the violation of the 13750 critical low, which shortly after, was followed up by some short covering. Over the past few trading sessions, we’ve been able to recover from sub 130 levels, and are now in the midst of consolidation. Note that the top of the consolidation range is ironically the 50% retracement from this last major selloff that started on April 17. In the July coffee futures contract, the key area to monitor is 12865. A violation of this area spells a continuation of the downtrend, likely back to lows not seen since June of last year.

 

Jul '17 Coffee Daily Chart

Jul '17 Coffee Daily Chart

RJO Futures | 222 South Riverside Plaza, Suite 1200 | Chicago, Illinois 60606 | United States
800.441.1616 | 312.373.5478

This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.