The coffee market continues to trade in a volatile swing range, with prices battling between the July futures range of 105 to 112. While the markets continue to gauge the delicate process of all U.S. states now slowly re-opening, the verdict is still out on what demand for coffee will be. We know that the at home consumption has not been able to take up the slack left by the absence of the restaurant business, and it seems logical that it will be some time until people congregate in such a way that the level of demand returns to where it was. Businesses still must adhere to social distancing policies, which result in less customers walking through the door, waiting in lines, etc. 

On the supply side, we still have a potentially huge Brazilian crop on the horizon that has likely kept the bulls at bay. Our friends at The Hightower Group have reported that “a very large Brazilian crop have kept prices from sustaining upside momentum”. Although these factors have been able to add pressure to coffee prices, the recent rally of U.S. stocks will assist in lending these prices some level of support, at least for now. Fresh bullish news in the way of recovering demand will be needed to support coffee prices in the long term, and we should continue to see some volatile swings the near term while we continue to wait out any potential vaccine for COVID-19.

Coffee Jul ’20 Daily Chart

Adam Tuiaana

Adam grew up in Chicago and was always fascinated by the fast-paced action found in the futures market hub there. He began participating in the financial markets by trading stocks in 1997 and began his career as a trading consultant with RJO Futures in March of 2009. At RJO, he specializes in risk management and disciplined trading plans, and is focused on educating clients with one-on-one consulting and training. Adam believes the best approach to trading is to take a measured and objective approach and let the markets guide your decisions.