Coffee Breaks Sideways Trend LowerPosted 02/15/2019 9:24AM CT |
The coffee market started today higher after trading lower all this week, reaching a new low for the May contract of 100.60. Pressure this week continued from weakness in the Brazilian real as well as wet weather in key growing regions of South America. The Brazilian real bounced back from a spike lower on Thursday which caused some recover in coffee as well. World production decreases are still a possibility vs. last year’s record production numbers and a recovery in the Brazilian currency also is supportive. Weather forecasts show continued wet conditions next week but hot dry weather from January could have already hurt production. As commitment of trader’s numbers become updated, there looks to still be a large net short position that would trigger a short covering rally on positive fundamental news. May coffee had been trading in a sideways pattern between 105 and 110 before breaking lower on Monday. A close above that 105 resistance would reverse the trend higher and breaking the 110 resistance would accelerate the short covering rally. Trade below Thursday’s low of 100.60 would continue the trend to the downside.
Coffee May ’19 Daily Chart