Last week September 2013 Coffee (NYBOT:KCU13) opened at $119.30 and closed the week at $122.70. We saw a close high of $127.95 last week. On Monday, July 15, September coffee was the percentage performance leader rising 3.85% for the day. On Friday, July 19 coffee was once again the percentage performance leader, this time dropping 3.80%. Looking at the daily chart on page 3 you can see the huge move on Thursday July 18 that ended in a doji with the market closing where it opened.
This looks like a classic example of buy the rumor and sell the fact as Friday’s reports came out saying no frost was coming and even a Brazilian official came out and said the largest growing region in Brazil was not threatened by frost. You see what happened on Friday.
Proceed to Page 2 for the latest COT Data...
On the weekly chart we see a bull move this past week in the Disaggregated COT report. You can see the Producers added to net short now -32,508 contracts net short. Managed Money dropped net short to -21,881 contracts and Swap Dealers added to net long now at 43,237. If this continues, coffee prices will rise.
You can see on the older Legacy COT report how Commercials have been mostly in a large net long position with a few breaks in between since March-April 2012. The posture by big money helped this long downtrend continue its slide. Remember Commercials/Producers are the sell side of an up-trending market. In the Disaggregated report Swap Dealers are put in their place by being taken out of the Commercial category from the Legacy report. So overall the fundamental of weather pushed this market up last week and there are solid global supplies. Keeping an eye on big money becomes vital if you want to catch the ride up.
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...
Technicals on the daily chart show the uptrend still showing signs of strength with ADX at 29.9 and moving sideways with today’s price action. MACD is still bullish and Stochastics did correct from overbought territory.
Click to enlarge.
Have a prosperous trading week.
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