Coffee Prices Hit A 4 Week High

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Coffee Futures---Coffee futures in the May contract is trading higher for the 4th consecutive session up another 25 points at 132.35 a pound as prices have now hit a 4 week high as a long-term bottom looks to have been established in my opinion.

I have been recommending a bullish position over the last month from around the 126 level and if you took that trade continue to place the stop loss at the 106 area as an exit strategy, however in next week's trade I will raise the stop-loss therefor the monetary risk will be reduced. At the present time coffee prices are now trading above their 20 & 100 day moving average with the next major level of resistance between 135 / 140 and I think that will be broken in the coming days ahead.

Fundamentally speaking  a decline in Brazil's coffee exports and excessive dryness in Brazil continues to support gains in coffee. Cecafe on Tuesday reported that Brazil's March total coffee exports (green, roasted, and soluble) fell -1.6% y/y to 3,438,538 bags. Also, Somar Meteorologia on Monday reported that rain last week in Minas Gerais, Brazil's largest arabica growing region, measured 4.7 mm, or only 22% of the historical average.

Coffee prices also have support from supply concerns after Citigroup said last Tuesday that arabica coffee would have a "sizable" deficit of -7.5 mln bags for the 2021/22 crop cycle. Coffee prices also have support due to dry conditions in Brazil.

At the current time I also have bullish recommendations in cotton and orange juice while watching sugar continue to climb higher and I do believe sugar prices historically look very cheap as I see no reason to short any of the soft commodities so stay long. 

 

TREND:HIGHER 

CHART STRUCTURE: IMPROVING

VOLATILITY:AVERAGE

 

 

 

If you are looking to contact Michael Seery (CTA—COMMODITY TRADING ADVISOR) at 1-630-408-3325 I will be more than happy to help you with your trading or visit www.seeryfutures.com 

 

TWITTER---@seeryfutures 

 

 Email: mseery@seeryfutures.com

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