Near-Term Recovery in Coffee

August 14, 2018 10:16AM CDT

Coffee is coming off contract lows with the risk off sentiment among emerging market currencies weighing down on prices. Close to record high production in Brazil and Vietnam has been a significant factor in this 21-month downtrend. Near-term supply concerns are observed in Colombia, Indonesia and India. Recovery in emerging market currencies has provided some support in the near-term.  Technically, the market is heavily oversold, however, with a record net short position and any bullish supply/demand news may provide a short covering bounce. There is still no bottoming in coffee with prices vulnerable to a test of the November 2013 low of 100.95. Resistance comes in around 107.70 with support around 104.80.

Coffee Sep '18 Daily Chart

Coffee Sep '18 Daily Chart

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