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September Coffee Violates Key Support

Posted 08/02/2018 8:56AM CT | Adam Tuiaana

It’s been reported by The Hightower Group that “it is likely that Vietnam’s upcoming crop will post a record high total.” This, in addition to a reported “record high Brazilian crop” continues to put major downside pressure on September coffee prices. However, this market is showing signs of being oversold, but even short covering rallies will need some bullish supply/demand news to negate this downtrend and turn this very large ship around. As I mentioned in my last article on September coffee, when the words “record high” are used when describing the upcoming supply situation (for any crop), use caution when taking a position against such news. Recently, these words have been used twice when describing the currently world supply situation, and we will continue to hold a bearish outlook.

On the technical side, a violation of the downside 106.90 corrective low from July 6 was violated with today’s price action. We will now likely see some volatile follow-through selling down to the 105 level before long. Keep on the bearish side for now and consider using put options to manage risk effectively.

Coffee Sep ’18 Daily Chart

Coffee Sep '18 Daily Chart

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Adam Tuiaana

Senior Market Strategist
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.
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