After two positive trading days, coffee futures pulled back. The trade has now entered an area that will be key over the next few sessions

December coffee futures have entered some consolidation. After the lows made in August and September, the futures contract tried to trade above 104.00 but that couldn’t hold.

Gold market futures large speculators increased their positions to nearly 4:1 on the long side by adding 120k new long positions.

The coffee market offers a very attractive risk-adjusted return from the long side given a very compelling set of bullish long-term indicators and patterns. Currently, there is an extremely speculative short position as a percentage of open interest in coffee as measured by the Commodity Futures Trading Commission’s Commitments of Traders data.

A look at long-term trends of commercial interest in the CFTC’s “Commitments of Traders” report.

With Brazilian “Flowering” season wrapping up, the coffee market braces for record production.

Crude oil and coffee set commercial trader net position records in November. WTI crude oil set records in both net and total position sizes. The WTI market has remained under $60 per barrel since November of 2015. May of 2016 saw the Baker Hughes rig count bottom at 318. There were nearly 1,500 rigs up and running in Q4 of 2015 when oil prices began falling precipitously. Currently, about 750 rigs are operating. This metric has been steady since early May of 2017.

Cotton was higher as the buyers appeared once again to cover short cash market positions. Trends remain up and the tone of the market remains positive.

Cotton was a little lower on some follow-through selling in response to the USDA reports released on Friday that showed ample production and supplies for the U.S.

Cotton was sharply higher to limit up in response to a week of very strong export sales and reports of increased mil buying that appeared after prices held support areas on the charts.