How High Are Coffee Prices Going?
Coffee futures in the March contract continue their torrid run to the upside hitting a 1-year high today higher for the 4th consecutive session up another 235 points at 124.35 a pound.
I am currently not involved in this market as the chart structure did not meet my criteria to enter into a position, however I am certainly not recommending any type of short position as I remember what happened in 2014 when a drought hit the country of Brazil sending prices sharply higher in a matter of weeks and that situation could be developing once again.
Fundamentally speaking current arabica coffee supplies continue to decline which is also providing support to coffee prices after ICE-monitored arabica coffee inventories fell to a 1-1/4 year month low of 2.12 million bags on Friday. Weather concerns in Brazil are another supportive factor for coffee prices after Monday’s data from Somar Meteorologia showed that rainfall in Minas Gerais, Brazil’s largest arabica coffee growing region, was only 57.9 mm over the past week, or 78% of the historical average, which may curb Brazil’s coffee yields.
TREND: HIGHER
CHART STRUCTURE: POOR
VOLATILITY: INCREASING
This article was written by Michael Seery (CTA—COMMODITY TRADING ADVISOR) www.seeryfutures.com
