March coffee is seeing a bit of support this morning from what may be a short covering rally. Coffee prices continue to be pinned down by a reported huge Vietnamese crop. The Hightower Group has reported that analyst feel the Vietnamese crop “will be close to a record”. Coffee prices will need some solid demand strength and supply news that falls short of said expectations. Some feel that coffee prices are oversold, and due for some kind of pullback to the 125-135 range, which coffee prices had been in throughout most of October and November. However, we cannot overlook that fact coffee prices not only violated the 125 range low, but also managed to violate the 119 critical support low from June. Yes, coffee prices have been able to hold some support, but traders should assume that follow through selling is on the horizon. Consider buying put options with strikes below the aforementioned critical low of 119. On this rally, you should be able to get them fairly cheap.

Coffee Mar ’18 Daily Chart