September Coffee Dives Deeper

June 21, 2017 8:27AM CDT

Clear and steady violations of critical lows (which should have been strong support) seem to continue as September coffee prices paint a very bleak story. As the stock market is on the rise, we can see the price action of the September S&P 500 shows quite the negative correlation to that of September coffee prices. Many traders might make logical sense of the fact that a strong stock market should equate to stronger demand, but we must keep in mind that coffee prices will need to see some significant depletion of our existing abundance of coffee stocks in order to lift prices higher. Not likely in the near future.

On the daily chart of September coffee below, we can see the aforementioned violations of the 13106 and 12765 critical lows. Both of these levels should have posed some support, but coffee prices have destroyed these levels with some volatility. Until we see some very big supply numbers dwindle, traders who believe that “the trend is your friend” should continue to be bearish.


Sep '17 Coffee Daily Chart

Sep '17 Coffee Daily Chart

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

The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that RJO Futures believes to be reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgement at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

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.

Distribution in some jurisdictions may be prohibited or restricted by law. Persons in possession of this communication indirectly should inform themselves about and observe any such prohibition or restrictions. To the extent that you have received this communication indirectly and solicitations are prohibited in your jurisdiction with registration, the market commentary in this communication should not be considered a solicitation.