Top Commodities - Coffee prices Outlook - April 1, 2011- global coffee production estimate : Coffee exporters worldwide are feeling the pinch of high energy prices. The rising cost of processing and transportation are putting a large dent in their bottom line. In the end we know who will pay, don’t we? The consumer! Short term we continue to face a tight supply situation. Of interest is the fact that the Coffee market doesn’t seem to care. Coffee traders have shipped close to 200,000 tonnes of Robusta Coffee to Europe from Vietnam. London Robusta Coffee for May delivery is trading at a high premium to the cash market. By selling London’s May Robusta Coffee futures they will lock in a handsome profit.
Tight supplies could give way to massive producer selling if Coffee prices head lower. I wrote last week that Coffee producers had been stockpiling Coffee waiting for higher prices. Right now it appears that higher prices, if they come at all, will be in the distant future. There are signs of bullish divergence on the daily chart. Not my favorite time frame, but it does exist. Producers will be waiting to sell into rallies if the current situation continues. With tight supply causing downward price movement I can’t wait to see what the effect of bearish fundamentals might be. Remember, the market is always right. Even if the market action doesn’t make sense to you there are three things a trader must remember. The market is the market is the market! It is never wrong.
Technical Analysis is a methodology. The information below is not to be taken as trading advice or as a recommendation to buy or sell any commodity future or option. It may or may not agree with the fundamental analysis that appears above.
Weekly Technical Indications 04/01/2011/ At this time the week’s trading range is 269.70 – 257.80, the last print is 266.20. The stochastic remains in sell mode. R.S.I. at 69.36 is again lower than last week’s indication of 71.58. The M.A.C.D. histogram indication of –0.07 is also lower than last week’s indication of 1.34. A weekly close at or above 271.70 in May Coffee will turn the weekly trend up.
Coffee prices Outlook - April 1, 2011
Coffee prices corrected down to a 1-1/2 month low from last month's 13-3/4 yr high. Bearish factors include (1) concerns that rising prices will dampen demand as prices have doubled over the past year, and (2) ICO's report that Jan global coffee exports rose +16% y/y to 8.77 mln bags. Bullish factors include (1) ICO's cut in its 2010/11 global coffee production estimate to 133.7 mln bags and its statement that global coffee supplies will be "tight" the rest of the year as stockpiles in producing nations stay near a 40-yr low of 13 mln bags, (2) excessive rains in Brazil that may cut output due to "black heart" fungus in coffee trees, and (3) ICO's prediction that Brazil's Arabica bean output may fall 13% in the year starting July 1 with plants in the lower-yielding half of their 2-yr cycle.
Fundamental Outlook-Bull market correction- Coffee prices are correcting lower but remain bullish on tight supplies, at least until Brazil's harvest begins in May. Coffee production in 2009/10 fell -4.5% y/y to 122.9 mln bags (ICO), but production should rebound to +8.8% y/y 133.7 mln bags in 2010/11 Brazil's 2010/11 (Jul-Jun) production will rise 23% y/y to 55.3 mln bags on a favorable 2-yr cycle (USDA).
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Source URL: https://pokbongkoh.blogspot.com/2011/04/top-commodities-coffee-prices-outlook.htmlTight supplies could give way to massive producer selling if Coffee prices head lower. I wrote last week that Coffee producers had been stockpiling Coffee waiting for higher prices. Right now it appears that higher prices, if they come at all, will be in the distant future. There are signs of bullish divergence on the daily chart. Not my favorite time frame, but it does exist. Producers will be waiting to sell into rallies if the current situation continues. With tight supply causing downward price movement I can’t wait to see what the effect of bearish fundamentals might be. Remember, the market is always right. Even if the market action doesn’t make sense to you there are three things a trader must remember. The market is the market is the market! It is never wrong.
Technical Analysis is a methodology. The information below is not to be taken as trading advice or as a recommendation to buy or sell any commodity future or option. It may or may not agree with the fundamental analysis that appears above.
Weekly Technical Indications 04/01/2011/ At this time the week’s trading range is 269.70 – 257.80, the last print is 266.20. The stochastic remains in sell mode. R.S.I. at 69.36 is again lower than last week’s indication of 71.58. The M.A.C.D. histogram indication of –0.07 is also lower than last week’s indication of 1.34. A weekly close at or above 271.70 in May Coffee will turn the weekly trend up.
Coffee prices Outlook - April 1, 2011
Coffee prices corrected down to a 1-1/2 month low from last month's 13-3/4 yr high. Bearish factors include (1) concerns that rising prices will dampen demand as prices have doubled over the past year, and (2) ICO's report that Jan global coffee exports rose +16% y/y to 8.77 mln bags. Bullish factors include (1) ICO's cut in its 2010/11 global coffee production estimate to 133.7 mln bags and its statement that global coffee supplies will be "tight" the rest of the year as stockpiles in producing nations stay near a 40-yr low of 13 mln bags, (2) excessive rains in Brazil that may cut output due to "black heart" fungus in coffee trees, and (3) ICO's prediction that Brazil's Arabica bean output may fall 13% in the year starting July 1 with plants in the lower-yielding half of their 2-yr cycle.
Fundamental Outlook-Bull market correction- Coffee prices are correcting lower but remain bullish on tight supplies, at least until Brazil's harvest begins in May. Coffee production in 2009/10 fell -4.5% y/y to 122.9 mln bags (ICO), but production should rebound to +8.8% y/y 133.7 mln bags in 2010/11 Brazil's 2010/11 (Jul-Jun) production will rise 23% y/y to 55.3 mln bags on a favorable 2-yr cycle (USDA).
Life Time Trading Range 41.50 Cents - $337.50 per Pound
Trades on The ICE 2:30 AM – 1 PM CDT
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