Coffee Reaches Extreme Oversold Levels; Could Bring Short Covering RallyPosted 03/15/2019 8:55AM CT |
May Coffee was slightly higher in the overnight session, but still well off Thursday’s spike highs. It shouldn’t take much in the way of positive news to see a major short covering rally and higher trade ahead. Good weather for Brazil in the new crop season seems to be priced into the market already, which is when we saw those sharp lows. On top of that, last summer’s record crop has also helped to pressure the market recently, and the market has yet to find much support from the outlook for 2019/2020 global production deficit. Total sales for the years so far are estimated at 50.78 million bags, while their total output is projected at 63.7 million bags. Managed money fund traders are holding a net short position of 75,075 contracts as of the last commitment of trader’s report on March 5th, and open interest has increased another 12,000 contracts since that date, which suggests the market could be in position to see short covering. Resistance comes in at 9815 and 9945 with support at 9600 and 9540.
Coffee May ’19 Daily Chart
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