While major populations prepare to come back to work, the current weak demand and forecasted questionable demand continue to add pressure to July coffee prices. In addition, there has been news of an extremely large crop forecasted from the largest producer of coffee, Brazil. Our friends at The Hightower Group have reported that “coffee has been pressured by a potentially record high Brazilian crop, and sluggish producer currencies as it has been as it has been unable to lift decisively clear off of its 2020 lows.”
Fresh bullish news in the way of recovering demand will be needed to support coffee prices in the long term, and we should continue to see some volatile swings the near term while we continue to wait out any potential vaccine for COVID-19.
From a technical perspective, traders may note that there is a potential head and shoulder reversal pattern to the downside (see daily chart attached). While these massive swings in coffee prices continue, with questionable demand on the horizon, many traders may benefit from staying in cash for the time being.