Producing Nation’s Currency Devaluation Not Enough to Keep Coffee Futures Down

Coffee futures have ground to a contract low early this year after the devaluated currencies of the coffee producing nations brought coffee prices to new lows when valued against the US Dollar. Coffee futures are up .01 cent today currently trading at $1.1575 per pound at the Intercontinental Exchange.

The underlying coffee market actually is reported to be experiencing tight supplies but that tightness has been masked globally by the weakness of the currencies in the major coffee producing nations. There has recently been a Brazilian currency devaluation, a Colombian devaluation, as well as other emerging market economies in coffee producing countries realizing currency devaluations.

The currency devaluation in many of these coffee producing nations can be considered short and medium-term situations and can – as we are seeing – overwhelm the overall fundamental situation,” said Laura Taylor, a senior market strategist at RJO Futures in Chicago, sharing her fundamental assessment of the coffee futures market. Taylor added,Eventually, however, with new coffee drinkers each and every day coupled with a steady demand for coffee already, the price of coffee will really come to light because the fundamental situation always prevails.”

The trend for coffee futures is down however a bottom for coffee futures may be on the horizon. Coffee futures have made a low in mid-January, and a higher mid-term low created just today hovering just above and below the $1.13 per pound support area. If it can hold, this can be a low in prices.

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.