July coffee remains on the defensive this morning, although prices have avoided a retest of last week’s lows for the move so far. There was no near-term catalyst for Wednesday’s selloff but there were reports of producer selling near this week’s highs, which more than likely eroded positive market sentiment fairly quickly. A lack of bullish supply news has kept the market’s focus on a potentially record-sized Brazilian coffee crop later on this year, and kept the coffee prices from sustaining any strong move above the longer-term downtrend. Yesterday’s severe downdraft triggered the ICE exchange’s circuit-breaker, which could further add to the market’s anxiety during today’s session. Sluggish global equity markets and a rebound in the Dollar are likely to put additional pressure on coffee prices this morning as well. ICE exchange coffee stocks were down 2,806 bags at 1.524 million as of April 25th, with 17,710 pending review.
July coffee looks to be heading towards a retest of last week’s lows for the move later on during the session, as prices are not finding support from outside markets this morning. Given the volatile nature of coffee’s recent price action, a decisive move below the 173.90 level could lead to another sharp selloff during today’s trading.

Technical Analysis

COFFEE (JUL): Stochastics are at mid-range but trending higher, which should reinforce a move higher if resistance levels are taken out. The market back below the 18-day moving average suggests the intermediate-term trend could be turning down. The outside day down and close below the previous day’s low is a negative signal. The market is in a bearish position with the close below the 2nd swing support number. The nearterm upside objective is at 189.06. The next area of resistance is around 181.97 and 189.06, while 1st support
hits today at 171.53 and below there at 168.17.

StockMarketNews Research Team