In May and June we will see what the Brazilian harvest has to offer. Many believe that the numbers will be less tight than expected, which should help the bears take control. Adequate supplies should mean resistance levels will keep coffee prices from moving higher. In addition, the USD is seeing a strong boost, which continues to put pressure on most soft commodities. Big funds may be gearing up for a large short position, as open interest is at very high levels.


On the daily chart of March coffee below, we can see the violation of the 13860 critical low on March 24, which shortly after, was followed up by a quick correction and consolidation. So far, a quiet day in today’s price action, but in the near term, traders should look for a re-test of the December low of 13520. If this area is able to hold support, we may see a bounce back to the top of the range, say 14550. However, a violation of this area spells a major selloff, likely back to lows not seen since June of last year.


May Coffee 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.