Daily Coffee Market Outlook

NY- Sell (1)- Yesterday saw Dec come off in spectacular fashion as stops were triggered below the all important support level at 137.50. It appears the recent uptrend has come to an end as the contract teeters on the brink of further losses below 133. We reverse our outlook to the downside now and expect further losses; technically speaking, a decisive break below 133 could see Dec retreating back towards the low 120's and launch another challenge of the base that was so effectively formed back in late August/September. The market will need some help from a weak dollar in order to clamber above 138 and regain a semblance of stability.

Liffe- Sell (2)- Liquidation was the order of the day in London on Tuesday as big losses happened accross the board. Selling originating from specs, funds and origin all converged as initial support at 1400 then further to 1360/80 in Jan was broken triggering further stops and further liquidation. With all key support broken now, the June low of 1295 is brought firmly into the fray and traders will be watching closely to see what happens next. We are bearish for the prospects of London over the coming weeks although today may see some profit taking and consolidation as the US and some of Europe enjoys rememberance day holidays and market participants regroup. A rebound above 1400 is needed if Ldn were to gain some sort of stability.

Daily Coffee Market Outlook

NY- Buy (1)- Friday proved to be somewhat of a mixed bag in NY as early strength turned into weakness with Dec closing 3.20 cents down on the day. Of note was the US non-farm payrolls and US employement data which surprised to the downside. The psychological level of 10% unemployment was breached (to 10.2% vs estimated 9.9%) and was the driver of the move. Despite this, however, support at 137.50 remained in-tact; coupled with G-20 comments on Saturday regarding stimulus measures and their commitment to continue with them, we remain bullish NY. Fears of a withdrawal of stimulus measures have plagued equity markets of recent weeks and the pledge to continue pumping money into the economy should support risk appetite into year end. As such, 146.50 remains a viable target for Dec. On the downside, look for support at 137.5 and 134.

Liffe- Sell (1)- Ldn continued its consolidation albeit slipped somewhat to close at 1439 in Jan. The market is almost impossible to read with the dollar, equities or even fundamental macro data having no impact whatsoever. Congestion has appeared around 1435 providing what looks to be a semblance of support. Below here, 1407 is your next level followed by 1370. There looks to be little chance of an assault upon the 1480 zone in the near future and as such we see more risk to the downside and look to sell through stops around 1430/35.

Daily Coffee Market Outlook

NY- Buy (1)- Initial weakness was shortlived yesterday as Dec briefly tested resistance at 140 before rallying, closing up 1.35 cents on the day. All eyes today are on US non-farm payroll data released at 13.30 GMT. Analysts are expecting an improvement on last months reading and only a 0.1% increase in US unemployment to 9.9%. Flow is likely to be switch oriented before the figures and expect volumes to be light. We remain bullish above 140; however, the unemploymenty data will be critical, and a worse than expected reading could send NY tumbling. A break below 140 on weaker data and 133 is your next target, followed by 128. To the upside, expect resistance first at 146.50, then your next resistance lies at 151.

Liffe- Neutral- Once more Ldn consolidated in a sideways pattern yesterday, Jan finishing $2 down on the session. Like NY, traders are waiting for the all-important US unemployment data and this will provide a platform upon which to trade. On better than expected data, London may be able to test its upper consolidation level of 1480 opening up gains to 1500. To the downside, we see support at 1420-1400. Today, once more, we choose to remain neutral pending the coming macro data.

Daily Coffee Market Outlook

NY- Buy (1)- NY closed relatively unchanged yesterday following a slightly worse than expected ADP employment figure and unchanged FED rate announcement that signalled they would remain on hold for an extended period (at least 6 months according to analysts). Dec continues to build a base above 140, and as long as it keeps closing above here, we remain on target for a possible rally to 146.50 in the short term. Volume remains relatively light and traders will look to jockey for position over the next session and a half in anticipation of Non-farm payrolls tomorrow which will shed more light on the grass-roots state of the economy. Demand remains around 139/40 with next support at 133. Resistance can be found at 146.50 then 151.

Liffe- Neutral- Another relatively quiet day for Ldn yesterday as Jan continued to trade in a tight range around the 1450 level. Traders appear to be waiting on the sidelines as volumes remain light and there is little technical impetus. As such, we continue our neutral stance and look for a break of 1480 to the upside or 1420 on the downside before embarking on a strategy. Tomorrows Non-farm payroll data and resulting equity/dollar movements could provide the kick start that Ldn needs to break from this current consolidation.

Daily Coffee Market Outlook

NY- Buy (1)- NY managed to break and close through the important 140 resistance level on Monday thereby voiding our bearish stance. Yesterday saw a dip towards 138 but the decline was short-lived and Dec managed a close above 140 once more. Despite dollar volatility and uncertainty resulting from the carry trade 'asset bubble' it appears as if the market is taking these 'setbacks' in its' stride and the appetite for risky assets and commodities remains. As such we target 146.50 and further 151. To the downside, support resides at 138 and uptrend demand of 133. A break of the latter would see Dec NY tumble back to the 120's.

Liffe- Neutral- The market was unable to hold onto Mondays gains yesterday as it tumbled back under previous resistance at 1463. Most likely, the retreat was caused by profit taking from specs as producers kept out of the market for the most part. Technically speaking, the failure to hold above 1463 would signal the possibility of another downside spike; however, on the back of the current uptrend and potential for further NY gains, we prefer to remain neutral for the time being. We see the possibility for consolidation in the short term between support at 1411 and resistance at 1483. Medium term, we need fresh fundamental support from adverse weather/poor harvest indications in vietnam before the market attempts to hit the key upside target of 1528. The direction of the dollar will be critical but fireworks today should be saved until tomorrow (excuse the pun) as the US enjoys a holiday and the market flow remains light.

Daily Coffee Market Outlook

NY- Sell (1)- Small mid-week gains in Dec were thwarted on Friday as US fundamental data showed that confidence is waning and consumers are putting the brakes on spending; inevitably, the dollar rallied as equities lost ground. Support remains at 133 cents/pound, but we see risks to the downside, so long as the 140 resistance level is not overtaken in the meantime. Notably, revered economist and investor Nouriel Roubini commented in this mornings Finacial Times that 'the mother of all carry trades will burst the biggest asset bubble'- in short, that the weak dollar is financing risky asset purchases. The quandry for central banks then and the US in particular, is whether to intervene in the currency markets to prop up the dollar and or raise FED interest rates. The former would wreak havoc on equity and commodity markets (coffee included); the latter could put the brakes on any recovery that western economies are experiencing (or seen to be experiencing). The coming G20 meeting at St. Andrews could then prove pivotal, and should be watched closely for any currency intervention comments (or lack of).

Liffe- Sell (1)- The market receeded somewhat on Friday in line with NY ICE 'C'. While 1463 resistance in January is still intact, support firstly at 1403 then more critically at 1370/60 remain in focus. We remain bearish and would look to exploit any rallies towards 1463 as a sell opportunity. Conversely, a break and close above here and we look to the elusive 1530 ceiling once more. The dollar should be watched closely today following currency and carry trade chatter over the weekend as it is likely to set the tone for Liffe and ICE 'C' today.

Daily Coffee Market Outlook

NY- Sell (1)- ICE 'C' rallied yesterday on the back of a better than expected US GDP reading, as traders shed the dollar and ploughed into riskier assets. However, key resistance at 140 remains untouched and Dec requires a close above here to indicate a further assault of the elusive 146.50 supply point. On the back of commerce department figures indicating consumer spending decreased last month, we choose to remain bearish today amid dollar strength and equity weakness. Support remains at 133 to the downside, a break of which may hasten a retreat into the 120's. To the upside, traders still look for a break of supply at 140.

Liffe- Sell (1)- LDN has been very difficult to read of late, with thin trading and stop triggering creating increasingly volatile sessions. Looking at Jan, yesterday turned out to be rather 'subdued' in comparison to recent days with a range of $22 and closing $15 up, flow dictated mainly from the rolling of Nov/Jan positions and dollar strength. Jan has certainly looked stronger since Tuesdays topside stop triggering but we need a solid close above 1463 first, then 1483 before we can meaningfully challenge 1530 once more. Below 1463, we are somewhat bearish today; amid a weaker commodity picture, and with the first support being some way away at 1397 we see 'danger below'. As mentioned, look for a close above 1463 to give some semblance of bullish stability.