Pests & Rain in India Can Be Bullish for Coffee Futures

Coffee futures will have to digest the supply/demand situation once again after India’s crop, which was forecasted to have a record-breaking coffee crop, is now threatened by torrential rain and pest attacks.  Coffee futures closed down minimally today, but has also extended its lows and resuming its overall downtrend.

India is Asia’s third-largest coffee exporter and is now expected to forfeit 30,000 tons less product after the biggest rain downfall in two decades not only damaged the beans, but increased pest attacks.  So will this event even put a dent in the arabica-type inventories that are expected to climb to their highest amount since 2009?
           
Technical indicators are oversold in coffee (futures).  With a 9 RSI reading under 30, the coffee market is extremely oversold.  Also, the last Commitment of Traders (COT) report showed trend-following fund traders net short a little over 27,000 contracts as compared with the record net short of 39,330 meaning a short covering recovery might be in the cards soon,” said Christian Moreno, a commodities broker for HighGround Trading Group in Chicago, regarding the current coffee futures situation.

Coffee futures downtrend still prevails with absolutely NO BOTTOM yet in sight.  Let’s look for a bounce higher for the next opportunity in this market.

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