Twice today, once on the opening and then again at 10:15 the July coffee contract tried to move over 1.24 and fell back. Yesterday when the Dollar and the Real traded down and up respectively and the impeachment proceedings in Brazil were thought to help the economy, the coffee market turned bearish and continued down slightly today. The attached article from yesterday explains the situation further.
Today July closed down 75 points at 1.2335.
With winter approaching in Brazil and world stocks at a low level, the market still has a bullish side.
Today was a day of correction. After rising seven out of the past nine days and after gapping up on the opening this morning and continuing to go up 200 points, at 9:15 the market said enough is enough and dropped 500 points in a half hour. With a short pause at 11:00 the market continued to drop on pretty good volume. The July contract closed down 460 points at 1.2410.
The Dollar has retracted from its high. It is now about where it was in August of last year. The Brazilian Real has moved off of its lows and it is also in the same area that it was last August. The July coffee contract is about five cents lower than where it was in August of last year.
So based on currency trading without consideration of weather or Brazilian politics in the 1.25 to 1.30 range.
However, and in spite of the down market today, the attached Dow Jones report, which was issued before the market dropped today, is rather bullish.
Happy Saint Patrick’s Day to everyone, especially my Irish friends!
Today the May coffee contract is at the highest high since October 2015. The market has been as high as 1.3490 and is currently trading at 1.3400 up 500 points. Since March 2 during 10 out the past trading 12 days the market has been up and gained 1925 points in that period.
Once again the value of the Dollar and the Real is influencing the market. This month the Dollar has dropped dramatically. Today it is experiencing one of the largest drops this year. On the other hand the Real this month is at the highest level since September. Brazilian politics is partially influencing this move.
I have attached two articles. One talks about Brazilian politics and the possible impeachment of the President. The second article talks about the price spread between “Gourmet” and mass-market coffees.
On Friday the May coffee contract rose 230 points to close at 1.2105, the highest close since February 5 and above the 40 and 60 day moving averages. Typical with commodities and especially with coffee just when you think that there is a trend in one direction the market aggressively turns the other way.
During the past week the Bovespa, a stock exchange in Sao Paulo, Brazil, rose 17.5%. On Thursday and Friday the Real was up strongly and Dollar was down. These actions discourage sellers.
The corruption scandals in Brazil have been weighing heavily on the commodity and stock markets. Last week authorities seem to be clamping down and the investigation is widening, maybe to the President and former President. See the attached article from Dow Jones.
Yesterday was the first up day in seven trading sessions. May coffee was up 80 points at 1.1555. Today May has opened strongly up at 1.1785, up 230 points. Although these two up days are not unusual after six down days, it is noteworthy because the attached technical article indicates that the market is still bearish.
During the last three days we have seen the market challenge 1.15 and 1.14 only to meet heavy resistance just like on January 20 and 21. Since January 20 the market has hit 1.1340 twice which resulted in the market moving up the next day.
May will probably challenge the lows again, but will we get to $1.00??
I hope that everyone is having or had a good weekend. For those football fans it looks we should have a great game this evening between the aging, aching, and very skilled Manning and the young energetic ( I am having fun! ) Newton.
On Friday March coffee corrected down 280 points at 1.2040 after having risen 685 over the previous four sessions. The increase has been encouraged by currency changes with fall of the US Dollar and a small increase in the Brazilian Real and dryness in Colombia.
I have attached a Dow Jones article which is a bit bearish.
For the last few weeks the coffee market has been relatively quiet while trading in a narrow range between 1.12 and 1.19. However, this week the market has gone up each over 600 points. It is currently trading at 1.2315, up 160 points and trading above an upper down sloping technical line and the 40 and 60 day moving averages, all which are bullish signs.
But, and there always is a BUT, one of the attached reports is bearish. It says that Brazil’s 16/17 could be a record. The other report indicates that this week is a holiday week in Vietnam and Brazil, Tet and Carnival respectively. Therefore volume is light this week as traders cover shorts and roll from March to May before first notice day.
Here are some comments about yesterday’s market:
HC’15 opened today @ 121.40 (+0.15)
HC’15 Current low: 121.35 (Support 111.00)
HC’15 Current high: 123.00 (Resistance 127.00)
A commodity friendly day included coffee in the performance, opening with a modicum of buying that would keep the market in an extremely tight band for most of the early hours. A generalized 15 minute selloff that coincided with similar action in cocoa and to a lesser extent sugar took the market to its low around 8am EST, but ultimately proved to be a short term buying opportunity. Volume overall was notable as the roll remains on target ahead of FND on the 19th. Weather has been trending in conversation, something that is likely to gain momentum following the FNC’s late day estimate of 1mio bags lost due to drought. Certified stocks drew 13k bags, taking the outright number to 1.59mio, continuing a trend that has caught the attention of the discretionary traders in the market. Spreads continue to tighten, with KC H/K reaching a peak of -1.85 intraday. The BRL rallied back inside 4.00 as January inflows reached 1.5bln per a Brazilian Central Bank report this morning, while embattled Senator Eduardo Cunha stated that formal independence is likely to be granted to the BCB. Meanwhile the BCB reportedly is seeking a 4.5% inflation rate before reducing interest rates, while warning of the potential for increased rates should inflation rise. A suddenly interesting environment has the makings of a two sided trade, however more work needs to be done before the cautiously friendly react in more than a tepid manner.
Today, March coffee closed down 455 points at 1.1445. Depending upon how you look at the market, today marks the sixth straight down day for March. However, last Friday March closed higher than Thursday’s close. If you look at the market with a candle stick presentation, a down day occurs when the market closes lower than the opening rather than lower than the day before.
Something happened last Thursday, Friday, and today that does not normally happen. On Thursday March open down or, as the trader say, gapped down, which means that there were no connecting trades. March closed at 1.1995 on Wednesday, but open on Thursday at 1.1905, down 90 points. On Friday the market opened gapped up 135 points. And then today March opened gapped down 105 points. Gaps in the trading occur when the bid or ask are more than 5 points from the previous sale. The big gaps that we have seen during the last three openings suggest extremely heavy volume in one direction or another at the opening.
I have attached two reports both of which are bearish. The first report forecasts Brazil’s crop size to be bigger than anticipated. The second report says that coffee pricing is still being influence by a strong dollar and a weak Brazilian Real.
The coffee market does have a way of making life interesting (or frustration?).
I hope that everyone behaved themselves New Year’s Eve or at least had a good time that they remember!!!
Last week we saw the March coffee contract go up three days in a row for a total of 755 points to close the year at 1.2670 down $0.552 for the year. The general consensus is that activity was mostly profit taking by the shorts.
Yesterday was a down day and today March is down 90 points for a close at 1.2300. March is still trading in the range that I mentioned a few weeks ago of 1.21 +/- 600 points.
I have attached a weather report for a variety of coffee producing countries around the world. Depending upon their geographical location (above or below the Equator) the growing and harvesting seasons vary. Colombia which is on the Equator has two harvesting seasons. The closer one is to the Equator the more opportunity there is for a coffee tree to have flowers and green and red cherries on the tree which makes it difficult to harvest because you do not want to harm the flowers or green cherries while you are picking the ripe beans. For Brazil the report indicates that the rain in the next week will be wide spread, but erratic and light.
Rain fall may be bullish, but the strong dollar and weak Brazilian Real is encouraging producers to sell.
This week should be a quiet week for green coffee. It is a short week and many traders are on vacation.
Today, March closed down 55 points at 1.1915. For the ten past trading days coffee has traded in probably the narrowest range all year – 1.2150 to 1.1750, only 400 points – with a daily trading range of only 300 points. As a contrast during the past year we have seen daily swings of 600 to 800 points. As the ten day trading range narrows the 40 and 60 day averages start to flatten out, but the market is still trading below these averages.
There is not much coffee news, but I have attached a coffee report from the USDA. Included with the report is a list of the marketing years for producing countries and their annual output over the past five years
May all of you have a Happy and Prosperous New Year.