Coffee Futures—Coffee futures in the September contract settled last Friday in New York at 96.65 while currently trading at 103.00 having one of its best weeks since March as prices have now hit a 4 week high. Coffee prices are trading above their 20 day but still below their 100 day moving average as I’m currently sitting on the sidelines as I’m not convinced the bottom is at hand, however many commodity sectors have started to rally as there is the possibility that coffee has finally bottomed at a 14-year low.
At the current time the risk / reward is not in your favor to take a bullish position as I believe it is time to be neutral, but keep a close eye on this sleeping giant as a long-term bottom may have been formed finally. Fundamentally speaking prices moved higher with arabica coffee at a 1-month high and robusta coffee at a 2-week high on signs of smaller global coffee supplies as the International Coffee Organization (ICO) on Wednesday reported that global Oct-Jun coffee exports fell -4.7% y/y to 83.8 mln bags.
At the current time my only soft commodity recommendation is a bullish cotton trade which is right near a 4 month high, but it looks to me with all the stimulus packages that the Federal Reserve has put in place that will push commodity prices higher going forward.
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