Reports continue to paint the picture of a very bullish outlook for coffee prices, due to a major production deficit. Our friends at the Hightower Group have stated that “the bullish supply outlook for the 2021/22 is highlighted by a likely 30% or larger decline in Brazil’s output, so seeing Brazil’s March coffee exports fall short of last years total could indicate that farmers may be starting to hold back on marketing their remaining supply”. This should pave the way for a revisit to the 1.40 level in short time.
From a technical perspective, May coffee has is beginning a reversal up H&S pattern with a break above the pattern’s 1.30 neckline. If this pattern follows through to completion, it carries a measuring objective to 1.39. The head of this pattern has found support and clearly taken a bounce from the 200-day moving average, found at the 1.20 level.
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