Coffee yield will grow. Will it become cheaper?

Market Leader informed

This year analysts expect a record-breaking crop of coffee beans - 139,4 million sacks ( 1 sack = 132 pounds = 60 kilos).

It is 12% more than in 2009. Brazil shows the biggest production growth. It is the world’s biggest exporter of coffee. Brazilian farmers have already gathered 54,7 million sacks, which is a good figure as compared with the last years’ one (44,8 million). Columbia has also gathered a rich crop of 9,6 million sacks (against 8 million in 2009).

Only Indonesia indicates negative dynamics: this year’s crop is 9,4 million sacks against 10 million sacks in 2009. The reason is unfavorable weather conditions. That is why experts are concerned not only about the volume of the Indonesian crop but also about its quality.

Let’s see what benefit we can gain from the info when the coffee futures (KC) is concerned. The daily chart indicates a steady uptrend within the scope of a sloping channel. In early November it got into a range. The following movement will be determined by the direction in which the price comes out of the range, with further settlement above/below its borders. An increase in supply should favor a decline in price. In this case the price may make another effort to reach $198. If the price settles below it may decline down to 184-186$ (variant 1). On the other hand, the price may be influenced by the US policy of quantitative easing, which has already started influencing the global markets through causing an increase in the prices on numerous recourses, including energy carriers and foodstuffs. The futures of coffee may also get into the wave, or may be it has already got into it, as the last 2 up-bars at growing volumes speak in favor of market strength. The implementation of variant 2 is highly probable, i.e. breaking through the resistance at $213, settling above it and continuing the uptrend to reach the target area at $220-222.

 

 

 

Provided by the Department of Market Sentiment Analysis, Masterforex-V Academy

 

 

 

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