Coffee futures hit a 12-year high in Friday trading as global stockpiles of the beans fell sharply. Inventories of both robusta and Arabica beans have dropped off, leading some to believe that prices will be higher as companies replenish their supplies.
Robusta stocks have dropped 39 percent from the end of 2009 until this week, reports Bloomberg News.
On the InterContinental Exchange in New York, coffee “C” futures contracts gained 1.39 percent to around $1.75 per pound.
More support for coffee prices came from low production in Colombia, one of the world’s most important producers of premium arabica coffee beans. Indeed, some in the coffee industry think that for high-quality beans, $2.00 per pound is not out of the question by the end of the year, reports the Financial Times.
Traders looking at the technical analysis of the coffee market agree, calling coffee’s current trading patterns a “bull flag.”
“In a bull-flag pattern, the market shoots up, rests, and takes another move higher,” said Jim Stellakis of Technical Alpha, a New York-based research firm. “In an extreme case, $2 can be the target, while a close below $1.68 could slow the advance or reverse it.”
Risk Disclosure
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.
