September Coffee Violates Key Support

August 2, 2018 8:56AM CDT

It’s been reported by The Hightower Group that “it is likely that Vietnam’s upcoming crop will post a record high total.” This, in addition to a reported “record high Brazilian crop” continues to put major downside pressure on September coffee prices. However, this market is showing signs of being oversold, but even short covering rallies will need some bullish supply/demand news to negate this downtrend and turn this very large ship around. As I mentioned in my last article on September coffee, 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. Recently, these words have been used twice when describing the currently world supply situation, and we will continue to hold a bearish outlook.

On the technical side, a violation of the downside 106.90 corrective low from July 6 was violated with today’s price action. We will now likely see some volatile follow-through selling down to the 105 level before long. Keep on the bearish side for now and consider using put options to manage risk effectively.

Coffee Sep '18 Daily Chart

Coffee Sep '18 Daily Chart

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