Over the past two weeks we saw a high hit in December 2012 Coffee at $1.8545 a pound and a low hit of $1.6170. Last week coffee opened at $1.6780 and closed the week at $1.6170. The previous week, coffee opened at $1.7285 the high was $1.8545 the low $1.6770 and the close $1.6810.
On the daily chart, you can see ADX is at 31.5 and rising with DI- over DI+. MACD is bearish and Stochastics are in deep oversold territory. You can see by looking at the price action how coffee hit a high of $1.8545 on Oct. 3 and formed a shooting star candle closing near the low and just below the open, highlighting a possible change in direction. The next day, Oct. 4, we had a confirming candle of the change. The next trading session, Oct. 5, we saw a TS Analyzers trade set-up and now the market is trading just below $1.6000. A solid break below $1.6000 and we could see the next level tested at $1.5500, which is where we saw coffee trading back in June 2012.
Proceed to Page 2 for the latest COT Data...
On the weekly chart, we see on the disaggregated COT report that Producers liquidated net shorts going from -27,393 contracts to -23,955 contracts. Managed Money went from 139 contracts net long to -1,401 contracts net short, and Swap Dealers liquidated net longs from 30,832 contracts to 28,445 contracts. If we continue to see this week to week, coffee prices will continue to drop.
If you need help understanding how to understand how to use the NEW COT report to your benefit get instant access to my new e-book "What Lies Beneath ALL Trends". It is filled with eye opening information.Commercial Net Tracker instructions: This form tracks the Commitment of Traders (COT) data for the commodity futures market. This form "looks" at the most recent five weeks of COT data and provides visual indications of the data. A) If the current value is at a 12-month low, the cell will display a red/burgundy background. B) If the current value is at a 12-month high, the cell will display a green background. C) If the current value went from net negative to net positive, the cell will display a blue background (indicating a bullish condition). D) If the current value is both a 12-month high and also went from a net negative to a net positive, the background will be green. You should view the data with green backgrounds to determine if they also went from net negative to net positive.
Proceed to Page 3 for this week's detailed fundementals...
Earlier this month we read that coffee production in Vietnam may drop from the all-time high of 1.6 million tons on dry weather crimping yields. This past week favorable weather in Brazil was seen as a potential benefit to the upcoming coffee crop. Rains improve flowering prospects. Why does this affect coffee prices? Read the table below to see the top 10 coffee producers worldwide in 2011 and 2010. Yes, Vietnam is the second largest coffee producer. More amazing than that is Brazil produces almost 2½ times more coffee than Vietnam and almost the same amount produced by 3-10 combined! And look at where Ethiopia was in 2010 and how this country moved up in 2011. The price action we need to watch this week is closes below and above $1.6000.
10 Biggest Coffee Producers 2011 and 2010
|
2011 |
2010 |
|
Brazil |
Brazil |
|
Vietnam |
Vietnam |
|
Ethiopia |
Indonesia |
|
Indonesia |
Colombia |
|
Colombia |
India |
|
India |
Ethiopia |
|
Peru |
Peru |
|
Mexico |
Guatemala |
|
Honduras |
Mexico |
|
Guatemala |
Honduras |
Have a prosperous trading week.
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