Continued strength in the Brazilian real, along with uncertainty in supplies seems to be prompting enough buying to provide support to March coffee prices. This is a market that has been in a complete freefall for quite some time and turning this massive ship around will require patience. There have been reports of high temps on their way to key Brazilian growing areas, and this forecasted heat may add some additional pressure to crops, prompting even more support buying. With a continued strong U.S. dollar and volatile stock market, I would expect to see some sideways price action before another big leg higher in March coffee prices.

On the technical side, we’ve triple-tested the 100 level and are trading slightly above this key support area. Traders seem to be waiting for a convincing break above the 107 resistance area before additional buying takes place, and any supply/ demand news should easily be able to push March coffee prices to challenge this area again. The 200-day moving average seems to be holding support for March coffee and is resting along the 103 level, which should also be holding support. I would not be surprised to see March coffee dip below this area again, as continued sideways consolidation will likely be ongoing for the next couple of weeks. Buying call options or selling put options with hedge protection could be a great way for traders to approach the bullish side of coffee, while effectively managing risk in the trade.

Coffee Mar ’19 Daily Chart

Coffee Mar '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.