Today’s Spotlight Market
Speculators have not been aggressive buyers in Coffee futures the past week despite the recent price recovery. The most recent Commitment of Traders report shows non-commercial traders added a paltry 81 new net-long positions during the reporting period ending August 30 which raised their net-long position to 37,689 contracts. Non-reportable traders were actually net sellers of 635 contracts during the same time frame lowering their net-long position to 4,591 contracts. Commercial traders are on the other side of the trade and reduced their net-short position by a modest 555 contracts to stand at 42,279 contracts.? ?
Fundamentals
Coffee bulls have moved off of decaf of late as prices rallied over 15 cents per pound since mid-August as disappointing Robusta Coffee harvests in Brazil and Southeast Asia could lead to improved Arabica Coffee demand. Brazil is expected to see its Robusta production fall by 16% this season which will add to the current supply deficit this season. In addition, a report by the International Coffee Organization showed that July Coffee exports fell by 22% to 7.75 million bags. While lower exports are not usually seen as supportive for prices, analysts note that the lower export totals were due to low supply of beans available for export and not slack demand. Still unknown is the effects of frost damage to the Coffee trees in Brazil which saw a series of minor frost events this winter. The extent of any damage to the trees may not be known until next season, which may force market participants to price in a ?risk premium? into the Arabica Coffee futures in 2017.?? ?
Technical Notes? -? View Today’s Chart
Looking at the daily chart for December Coffee, we notice prices staging a sharp rally since the middle of August as a ?V? bottom was formed. Prices are now above both the 20 and 200-day moving averages and the 14-day RSI is strong with a current reading of 66.93. The July 15 high at 157.65 remains strong resistance for the December futures, with support found at the August 17 low of 137.85.
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