The drought in South America that previously sent coffee futures soaring nearly 90% this year is coming back for an encore. Arabica-coffee futures have blasted-off to the upside all this week and today the technical trend has reversed to the upside.
A crop-forecaster in Brazil states the coffee crop is entering the main flowering stage that will be ready for harvesting in May, however, coffee-farmers are expecting a two-week dry-spell this month that will most likely hurt crop. What this means is that a persistent lack of moisture presents irreversible damage to the coffee trees – which is exactly what coffee futures are responding to.
The technical trend for coffee futures is now “up” as of today (as previously mentioned). Now I will need for coffee futures to pullback, or consolidate, before initiating any position. Coffee futures has been a good market for me this year, but the initial margin requirement is so high it requires me to be cautious with the trades.
ALL COMMENTARY IS CONSIDERED OPINION & VIEWS FROM THE AUTHOR AND NOT A SOLICITATION OF ANY SECURITIES. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION.