Coffee Futures Starting to Heat Up!
Speculative accounts are starting to warm up to the Coffee market of late, with the September contract surging to highs not seen since late June. Origin selling, which would normally appear on rallies during the harvest season in Brazil, has been light, further aiding the bullish cause. A strong Brazilian Real versus the U.S. Dollar and price subsidies from the Brazilian government are allowing growers to hold back on sales while awaiting higher prices. The next official crop estimate for the 2007-08 Brazilian Coffee crop comes on August 24th, with some early estimates calling for a crop of between 32 and 35 million bags. Roasters will be looking to secure supplies soon to meet winter demand and with Brazil’s domestic Coffee prices relatively high versus exchange prices, some traders look for roasters to use the futures markets and exchange stocks as a source for supplies.
Looking at the daily chart for September Coffee, we notice prices moving above the 100-day moving average during yesterday’s sharp rally. With follow-through buying in early trade this morning, the next resistance point appears to be the June 21st highs of 117.95. The 14-day RSI looks solid with a current reading of 65.65. Support is seen at 112.30, with major support found at the recent lows of 111.00. Currently, September Coffee is trading at 117.10, up 0.90.
