Coffee Futures---Coffee futures in the March contract settled last Friday in New York at 119.05 a pound while currently trading at 125.30 up over 600 points for the trading week as prices have now hit a 1-year high. Coffee prices have traded higher 6 out of the last 7 trading sessions as dryness in the country of Brazil has sparked prices higher as historically speaking coffee prices are still cheap as we just hit a 14-year low 2 months ago.
Coffee prices are trading above their 20 & 100 day moving average telling you that the trend is higher as I am currently not involved, but I'm certainly not recommending any type of bearish position and if you are long a futures contract I would place the stop loss under the 10-day low which stands at 114.65 as an exit strategy, however the chart structure will improve on a daily basis next week therefor lowering the monetary risk.
Fundamentally speaking supply concerns sparked fund buying of coffee futures as Coex Coffee International on Wednesday said that Brazil's coffee crop will be closer to 54-55 million bags below the USDA's forecast of 58 million bags. Also arabica coffee inventories continue to decline which is also providing support to coffee prices as the ICE-monitored arabica coffee inventories fell to a 16-month low of 2.056 million bags on Tuesday.
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