Crop Disease Reverses Coffee Futures Direction

Coffee futures have recently begun a new uptrend this week after trending .50 cents lower during the last quarter of 2012.  Recent news concerning coffee crop disease in the growing area of Central America, and the concern of reduced output, may have aided in changing coffee futures direction.

The Commodity Futures Trading Commission’s recent data has revealed money-managers and speculators have reduced their bearish bias after coffee futures plunged 37% in 2012, and has risen almost 8% this tear already.  The fungal outbreak that attacks coffee leaves has Guatemala, Nicaragua, and Costa Rica expecting smaller coffee crops this year.

Coffee (futures) looks like it’s getting stronger.  It needs to break out past the 157 level.  If (coffee futures) can get past that level we will see more added buying,” says Christian Moreno, a commodities broker for HighGround Trading Group in Chicago, regarding the current coffee futures situation.  Moreno adds, “(Coffee futures) are still well below the 200 Day moving average so don’t get too aggressive.”

As mentioned above, coffee futures have begun a new “up” trend just this week.  This is a very volatile market at times, and one that should only be traded with a larger account.  I will be looking for long coffee futures positions going forward.

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