Are Higher Coffee Prices Around the Corner?

February 9, 2018 9:27AM CST

The coffee market has given us some great volatility this week.  However, I would argue the trade is not completely convinced that the go ahead has been given to drive this market back to levels not seen since the end of 2017.  I believe the trade should start taking into consideration the idea that coffee has attempted multiple times to make new lows and failed.  In addition, with news that most of the 2017 Arabica surplus has been reflected into the current futures price, it makes one think that higher prices are just around the corner.  The following chart reflects the markets inability to make lower lows after a long year of consistently lower prices.  I believe that this is due to the idea that global demand for coffee does not look to drop off in 2018.  Furthermore, as we consider that analysts are also pondering the idea of lower crop yields in 2018 this could only help push the market back into the 125 to 135 price range.  Should the market press and close above 12600 basis March this may be the catalyst to finally give the trade confidence to hold onto long positions in this market. 

Coffee May '18 Daily Chart

coffee_may18_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.