Mixed signals from a weaker Brazilian currency and ongoing uncertainty related to the US/China tough-tariff-talks continue to be the main headline in all commodity futures for the past couple of weeks. Larger exports of Brazilian coffee suggest that the demand is still strong and likely bullish when viewing from the demand perspective. These continued strong export reports, coupled with short-term tight supply, has helped coffee to hold support. However, the key violation of the 115 level earlier this week is in fact continued bearish. The technicals don’t lie, and we are now approaching contract lows. September coffee is struggling for breath at the 11140 area now and it will take an amicable resolution to the aforementioned tariff situation to stabilize (and ultimately reverse) the price of September coffee. We all anxiously await the direction of these tariff talks, but now may be a good time for some short covering and profit taking for those who have been trading coffee to the downside. This senior strategist will be continued bearish, in a big way.

Coffee Sep ’18 Daily Chart