The 13 percent gains enjoyed by coffee futures during the past five trading sessions is likely to continue amid the reduced amount of exports from Vietnam, the globe's top producer of robusta coffee, an analyst with Rabobank International told Bloomberg.
"The market could see levels as high as $2,150 a ton due to a large bet placed on the options," analyst Keith Flury with Rabobank International told the news service on Monday. "The large open interest in the call option at $1,950 a ton for March has attracted futures buying."
At 1:41 p.m. on Tuesday, coffee futures dropped 3.7 percent, a 7.95 cent loss to $2.0665 per pound.
The past week has seen robusta coffee futures gain during the past week amid the slowdown from Vietnam. Robusta is heavily used for instant coffee and espresso while also for roaster buying. Brazil and Indonesia, respectively, are the globe's second- and third-largest robusta growers.
Reuters reports Arabica coffee futures dropped early during the Tuesday trading session, pulled down by Moody's Investors Service slashing the credit rating of six nations in Europe.
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.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
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 third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.