July coffee prices have rallied over the past week mostly due to strength in the Brazilian currency, along with some harvest issues in key growing areas of Brazil. The Hightower Group reported today that “heavy rainfall in Brazil’s Arabica and Robusta regions over the next week should continue to slow harvest pace”. These reported harvest issues, weighed against a still very large supply of old crop coffee should help to keep July coffee prices in check. As I’ve written many times prior, we have yet to see any solid bullish supply news to reverse this falling market. We should consider the fact that there will be extremely good resistance at the 9300 level in July coffee prices, and we will likely see prices resume to the downtrend unless we receive some extremely strong bullish supply news. Trend followers will likely adhere to bearish positions initiated at the 9300 area, as this would be the top of a long-term downtrend channel.

A strong US dollar continues to hold support above the 9700 level and remains in an uptrend, adding selling pressure many of the world’s commodity prices.  

I remain bearish on July coffee prices and would expect formidable resistance at the 9300 level in the near-term. With such volatility on the horizon, I would advise using options to manage risk and gain exposure to the potential resumption of the current downtrend in July coffee prices.

Coffee Jul ’19 Daily Chart

Coffee Jul '19 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.