Bearish forces have, and likely will continue to, control coffee prices. Fundamentals that seem to keep pressure on coffee prices include the ongoing awareness of massive crop production from both largest coffee producing countries, Brazil and Vietnam. On top of this, continued weakness in the Brazilian currency perpetuates selling from major coffee producers. We have seen a nice pullback and consolidation, but weakness is still underway. Traders who continue to look for a bottom to this falling market should stand aside, as the bears are in full control.

 On the technical side, a clear violation (and subsequent rally) of the 9860 low from September 4th was in fact bearish, complete with follow-through selling that lead December coffee prices down to the 9500 level. We’ve since seen a rally back to the 10075, where December coffee prices were met with firm resistance. Consider using put options to take a bearish position and manage risk effectively.

Coffee Dec ’18 Daily Chart

Coffee Dec '18 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.