Coffee Futures—Coffee futures in the December contract settled last Friday in New York at 100.90 while currently trading at 101.00 basically unchanged for the trading week as prices have been stuck in the mud over the last 3 weeks. I have been recommending a bullish position from the 101 level & if you took the trade continue to place the stop loss under the 14 year low which stands at 93.40 as an exit strategy.
Fundamentally speaking one supportive factor was the action by the ICO on Thursday to cut its global 2018/19 coffee surplus estimate to 4.05 mln bags from a Sep estimate of 4.96 mln bags. Another positive for coffee prices is tighter current supplies after ICE-monitored arabica coffee inventories fell to a 1-year low of 2.267 mln bags Wednesday.
Volatility in coffee at the current time is extraordinarily low as I don’t see that situation lasting much longer & if you take a look at the daily chart an ascending triangle pattern is developing which is a bullish technical indicator towards higher prices, but we need some fresh fundamental news to dictate short-term price action, however I still remain bullish so stay long and continue to place the proper stop loss.
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