RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Softs

Coffee Reaches Extreme Oversold Levels; Could Bring Short Covering Rally

Posted 03/15/2019 8:55AM CT | Tony Cholly

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

Coffee May '19 Daily Chart

If you would like to learn more about soft futures, please check out our free Fundamental of Softs Futures Guide.

Request My Copy
800-826-2270312-373-4968Series 3 Licensed

Tony Cholly

Senior Market Strategist
Tony majored in Economics at Eastern Illinois University. He performed his thesis on the market price of corn in the market and the factors that affect it. Tony was drawn to futures trading because of the opportunity to have financial gains in an economic environment. He prides himself on working with customers one-on-one and developing a trading strategy based on the client's needs and wants.
Read More