Coffee prices have firmed up on a massive rally, primarily based on tighter supplies in Brazil, and issues related to a lack of shipping containers.  Our friends at The Hightower Group have reported of that the “situation may not be resolved soon as several major producers are seeing current supply bottlenecks.”

We continue to see unprecedented levels of volatility as the world struggles to cope with weighing the very realistic free fall of each economy versus that of risking the health of our citizens. Commodities will continue to find unstable ground as the underlying fundamentals bear little (if any) impact on the overall price action we continue to witness these days.

From a technical perspective, the 130 level in May coffee prices should provide strong resistance, and I would expect to see some long liquidation in the short term. This rally and strong price action should be viewed as a potential reversal to the upside in May coffee, but with the continued uncertainty related to the Coronavirus, we should expect a short-term selloff.

Coffee May ’20 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.