The struggle continues with September coffee prices. Traders continue to be focused on the extremely bearish supply side of the equation. Although we’ve seen an upswing in the demand for coffee, The Hightower Group reported that there is still a “record high Brazilian crop to absorb”. Note to traders, when the words “record high” are used when describing the upcoming supply situation (for any crop), use caution when taking a position against such news.

Weather forecasts in major growing areas of both Brazil and Vietnam continue to be positive, adding continued pressure to September coffee prices. Also, let’s keep in mind that nothing has really changed from tariff talks, which will perpetuate uncertainty and the likelihood of a “risk-off” mentality when analyzing many of these commodities.

On the technical side, a race to the 106.90 corrective low from July 6. If this level is violated, we can potentially see some volatile follow-through selling, down to the 105 level fairly quickly.

Coffee Sep ’18 Daily Chart