Brazilian Coffee Crop Drying Up?

?Today’s Spotlight Market
Drought conditions may have caused irreparable damage to the Brazilian Coffee crop for the upcoming season.? Brazil produces roughly a third of the world?s Coffee exports.? News was spreading that drought conditions were damaging crops to a greater degree than previously expected.? The growing region had rain last week, which did snap a streak of 6 straight weeks of drought conditions.? While farmers welcome rain, they would like to see sustained moisture that is able to penetrate the soil instead of running off.


The Coffee market is coming off of a surplus year, so near-term supplies of bean are more than ample.? However, the unusually hot, dry conditions could turn the tables, resulting in a supply deficit in the upcoming crop year.? Farmers are hoping that there will be enough rain in the next 15-20 days before they reassess the health of crops again.? The dry season in Brazil runs from April to September, making it imperative that Coffee crops receive moisture over the next month and a half. ?


Technical Notes? -? View Today’s Chart
Turning to the chart, we see the May Coffee contract rising to the highest price levels in 15 months.? Prior to slowly turning higher in early November, the RSI indicator bottomed out prior to prices.? The recent spike in prices has resulted in the May futures contract rising to fairly over-bought levels at 87.92.? The next upside resistance level comes in near the 175.00 level.



This article is provided for informational purposes only. No statement in this article should be construed as a recommendation to buy or sell a security or to provide investment advice. The content provided has been obtained from sources deemed reliable but is not guaranteed as to accuracy and completeness. optionsXpress makes every effort to provide timely information to its recipients but cannot guarantee specific delivery times due to factors beyond our control.

Derivatives involve substantial risk and are not appropriate for all investors. Please read the?“Disclosure Statement for Futures and Options”?prior to investing in futures or options.

For investments using a straddle or strangle options strategy the potential loss is unlimited. Multi-leg option strategies are subject to multiple commissions. Profits may be eroded by the commission expended to open and close the positions and?other risks?apply.