Coffee: Record Breaking Harvest Reports From Brazil Emerge
Coffee Arabica went into this weekend near the $315.32 price, which was slightly lower than the closing value the previous week, this as reports from Brazil show harvest levels are substantial.
All the concerns about weather and its impact on the Brazilian Coffee Arabica crop have suddenly vanished. Reports from Brazil show that crop yields per the ongoing winter harvest are substantial and will be almost 20 to 25% more than the amounts attained the previous year. The price of Coffee Arabica went into this weekend near $315.32.
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The price of Coffee Arabica may still look very high to speculators but it should always be remembered that the price of the market is the reality that is being transacted. Technically Coffee Arabica remains within higher realms that appear overly valued, but the price of the commodity remains stubborn. Support this past week of trading remained durable around $311.00 to $310.00. Momentum remains important in Coffee Arabica for traders to consider. The large harvest of Coffee Arabica will start to be sold largely from September into December.
Colombia Earthquake Compared to Brazilian Crop Size
Concerns regarding implications from the Colombia earthquake may remain early worries for Coffee Arabica this coming week. Colombia is the second biggest exporter of Coffee Arabica following Brazil. Concerns about Colombia may influence early price action and this will create an interesting sentiment battle among larger players as they consider Brazil’s record harvest which appears ready to be attained, compared to the situation in Colombia.
Before day traders react too fast to either one of the influences they should watch the opening of the Coffee Arabica market on Monday and see where price action flows. Lows seen on Friday touched the $310.80 vicinity. This is important because the earthquake in Colombia happened on Monday the 10th of August, and the high for Coffee Arabica became nearly $330.00 on Tuesday of last week. Meaning sentiment regarding the Colombia situation may be easing and the Brazilian harvest news could be taking precedent.
Looking for Lower Price Action in Coffee Arabica
Intriguingly the price differential in Coffee Arabica the past week remained quite calm. The high of past Tuesday compared to Friday’s lows was slightly less than $20.00.
Coffee Arabica can be much more volatile than it displayed last week, in fact recent price action in the commodity has been relatively calm compared to its historic price realms.
The lower price on Friday with only a slight climb afterwards and showing some tranquility near $315.00 opens the door to potentially speculative notions this coming week.
If Coffee Arabica remains below the 320.00 to 322.00 price points via stubborn resistance, this may be a sign some stronger selling will develop.
However, the last time Coffee Arabica sold below $300.00 in a sustained manner was in early July.
And what may be important via sentiment is that the higher prices developed in early July when weather concerns hit the Coffee Arabica marketplace with news reports.
Coffee Weekly Outlook:
Speculative price range for Coffee Arabica is $293.00 to $326.00
Coffee Arabica remains a strong speculative market. Day traders may believe correctly that the price of the commodity is too high, but betting on this perspective remains dangerous. Large players who control Coffee Arabica may not be willing to let go of their positions in the commodity quite yet and may want to try and push values slightly higher. If resistance starts to show its durability and the price differential via its week’s results remains limited, this may point to an inability among large players to create a sustained momentum higher.
If Coffee Arabica can push below the $310.00 value and show it doesn’t have much ability to climb, then more downwards motion could be created. While the reality of a large Brazilian harvest which will factor into the marketplace at some point is important, for the moment Coffee Arabica remains within higher known realms. Betting against the higher ratios in Coffee Arabica may be attractive speculatively, but it also remain highly dangerous.
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