RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Continued abundance of exports from major producing countries continue to keep the pressure on July coffee prices, as a visit to the 115 level is now in the history books. In my last article, I had mentioned that “continued violations of key support areas (most recently 11686) have been followed by tight corrections and continued selling.” Subsequently, once the 116 level was violated, July coffee quickly fell off, dropping to 11530.  Shortly thereafter, some short covering took place (tight correction) and July coffee prices rallied back to 12075. However, this morning we are now seeing some US dollar strength, and a “risk-off” mood is now underway, keeping July coffee prices in check at the 118 level. The next area of support on the horizon will be the 115 level. If this area is violated, expect a correction (possibly back to the 118 level again), and engage in a short position at that time. Traders can position themselves for a long-term downward continuation using long put options that allow exposure and leverage, while managing risk effectively. In addition, buy equal-numbered quantities of options, so that you can remove half of the position when the option value doubles (thus eliminating the premium risk).

Coffee Jul ’18 Daily

Coffee Jul '18 Daily Chart

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Adam Tuiaana

Senior Market Strategist
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.
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