On Monday, May 12, the July coffee contract rose 350 points to close at 1.3360. On Tuesday July tried to go higher, but lost 90 points. On both Tuesday and Wednesday July opened gap down meaning that it opened down from the previous day’s close. Those gaps were not filled by retracement during the day. On Thursday the slide continued with a loss of 615 points. Friday was a spinning top day with a close only 15 points different from the opening and a trading range of only 170 points.
What is going on?
The Brazilian Real has changed little over the past few weeks, but the Dollar has regained some strength which is bearish for coffee which is traded in Dollars.
Perhaps another reason for the decline is in two of the attached reports from Dow jones. One report is bullish because of the poor quality of the Brazilian Conlon coffee. One report indicates that the Colombian coffee crop is not to be as affected adversely as thought by the weather and the Broca, a beetle that harms coffee. And lastly, the Brazilian crop is expected to be 13% higher with the Arabica 2016/2017 crop up 21%.