RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

We’ve seen massive trading ranges over the past week, spurred by fears of smaller Vietnamese crop, squaring off against large global supplies. The Hightower Group has reported that there is an “expected drier outlook in Vietnam’s Central Highlands, Vietnam’s major coffee belt, with the drought expected to last through mid-April or possibly mid-May”. This is likely what is precipitating this tug-of-war over May coffee prices, and I would expect that until we have a firmer idea of how bad the crop outlook will be for the world’s second largest producer, we will see more sideways consolidation at support levels.

On the technical side, the main area of attention was the 101 level in May coffee. This area should have acted as strong support but was violated back on February 14th. Since then, May coffee prices have found the 101 area to be formidable resistance with very large trading swings between the 96 to 101 levels. We may see the same type of sideways consolidation we experienced from December through February, before finding a clear direction. A break above 10250 should signal a run to the 50-day moving average (currently resting at 10427). A violation of the February 26th low of 9635 should signal more selling to come.

Coffee May ’19 Daily Chart

Coffee May '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.