Consumers Love Their Morning Java
Today’s Spotlight Market
Large speculators have become bearish on the prospects for Coffee prices of late according to the Commitment of Trader?s report. For the reporting period ending April 14, non-commercial traders added just over 5,400 new net-short positions during the reporting period. On the other side of the trade were commercial participants who are now net-long just over 3,500 contracts, after adding about 5,300 new net-long positions. Small speculators remain net-long with a net position of 2,042 contracts.? ?
Fundamentals
Though having a slight bias due to the name of this newsletter, I must say that Coffee consumption has seen a revival worldwide with demand for this traditional morning pick- me-up has moved to record levels.? The International Coffee Organization (ICO) has forecasted 2014 global demand at 149.27 million 60kg bags. This was 2.3% higher from the previous year, as growing demand from emerging markets contributed to the robust demand last year. Concurrent with rising demand, Coffee production is expected to have fallen to 141.85 million 60kg bags on reduced production estimates from Africa. The ICO now expects a 2014-15 Coffee deficit of between 7.4 and 8 million bags. In the coming weeks, Coffee traders will be keenly focused on production reports out of Brazil, the world?s leading Coffee producing nation. In particular, market participants will be watching if drought conditions early in 2014 have had a material effect on this season production, as Coffee trees may not have fully recovered from the stress of hot and dry weather.?? ?
Technical Notes? -? View Today’s Chart
Looking at the weekly continuation chart for Coffee futures, we notice prices in the midst of a downtrend, with prices declining nearly one dollar per pound from the recent high made back in October 2014. Recently prices appear to be attempting to consolidate between 125.00 and 150.00 with the 14-day RSI rebounding from near-oversold levels to a more neutral reading of 42.07. Resistance is seen at the recent high of 147.35, with support found at the March 9 low of 126.45.?
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