Daily Coffee Market Outlook

NY- Neutral- The 'C' continues to be dictated by the whims of the greenback and yesterday was no exception. With the macro picture driving things, todays US housing data could be important; otherwise, very little else to report with May continuing to range between the 130 lower border and 135 supply point. We expect much of the same today and thus remain neutral. A breach of either border is needed for any sustainable developments in NY.

Liffe- Buy (1)- Despite predictions to the contrary, LDN is stubbornly hanging around the 1380 level in anticipation of a possible move to the upside. Origin selling has not shown itself despite the steady grind upwards and LDN has remained remarkably resilient to the movements of the USD hinting at further gains to come. Last weeks performance and continuation yesterday will have bouyed the technical outlook and thus we look for more gains today. 1300 appears to be the key upside level with 1280 providing interim resistance; with both levels breached we see little to stop a charge towards 1340. Conversely, a afilure at 1280 and slide downwards today will leave support at 1250 exposed once more.

Daily Coffee Market Outlook

NY- Neutral- The backdrop of a stronger dollar accross nearly all the majors sent NY tumbling on Friday as recent spec longs liquidated and origin joined in the selling. Of late, its seems every time the board makes a sustainable move upwards, it comes crashing back to reality, in effect, mirroring developments in the global macro recovery. While May is trapped in the 130-135 consolidation zone we choose to remain neutral; action is likely to remain muted until later in the week with US retail sales on Thursday and GDP/Univ. Michigan Sentiment indicator Friday.

Liffe- Sell (1)- Despite clawing back some recent losses last week, LDN was unable to make a sustainable break above 1280/1300. Friday saw the market capped due to a resurgent USD and lack of any really 'big' players going long has ensured gains have not been dramatic. Following the failure to breach 1280, we see the prospect of losses likely, ad watch for spec liquidation below 1250. 1200 remains the bear target to the downside and should provide some semblance of support. 1280/1300 remain the supply points.

Daily Coffee Market Outlook

NY- Neutral- NY remains rangebound between the 130 and 133.50 levels. Following last nights FOMC meeting and subsequent pledge to keep rates low, we see the prospect of small gains accross commodity indexes; however, the impact in the 'C' should be relatively muted and with no fresh fundamental coffee data the range in May should remain intact. To the upside, should the 135 area be challenged, this could elicit short covering and trigger stops to 137/138- but don't hold your breath.

Liffe- Neutral- Like NY, LDN appears to be stuck in a range between the 1200 and 1250 levels. The Vietnamese stockpiling rumours appear to have hit a 'sceptical impasse' as traders demand 'evidence' of the plan going ahead. The FOMC pledge should give LDN a semblance of support but not enough to break the current range. We remain neutral for the short-term, and look for a range breakout at 1250 and subsequent challenge of the 1280/1300 resistance zone before abandoning our longer-term bearish outlook.

Daily Coffee Market Outlook

NY- Sell (1)- A stronger USD and less than encouraging murmurs from China regarding interest rate increases sent the 'C' lower yesterday. However, Despite a brief probe below 130, the bears were not able to keep May below the lower support zone and the contract settled around 131. Today the onus remains on the downside. However, with the FOMC interest rate announcement due this evening, expect volumes to be low as traders pause in anticipation of what Bernanke has to say in terms of future direction. 130 should remain in support while 135 followed by 137 should cap the upside.

Liffe- Sell (1)- Early trading yesterday witnessed further losses as May made a charge for the 1200 bear target. Momentum was stopped short however as LDN recovered from the lows to close only a couple of dollars down. Momentum is still to the downside despite the bear 'failure' and we look for further losses today. The FOMC rate announcement this evening should ensure light volume and keep any movements muted.

Daily Coffee Market Outlook

NY- Sell (1)- NY failed to hold the 'high ground' on Friday as May closed below the 133.50 stability level despite posting fresh highs early on in the session. Concensus emerged over the weekend that Chinese premier Win Jiabao may take steps to cool economic expansion by raising rates following higher than expected inflation figures. Similar thoughts emerged from India, sending emerging market indices lower overnight. This is bad news for global markets as whole, especially commodities that have risen sharply over the last year fuelled by Chinese expansion. As such, the 'C' should retreat somewhat although the lower end of the consolidation at 130 is unlikely to be breached. 135 will provide a cap to the upside for now.

Liffe- Sell (1)- Upside developments arising as a result of the Vietnamese stockpiling plan appear to have been put on the back-burner for now as LDN resumed its downtrend at the end of last week. Failure to breach 1280/1300 has sent May Southwards as any hopeful longs liquidate and bears re-instate their positions. Developments emerging from China and the East should put the brakes on any upside potential today and as such we return to our bearish stance barring any more Vietnam rumours. Traders are likely to have their sights firmly on 1200 over the next two sessions and it remains to be seen how much demand will arise there.

Daily Coffee Market Outlook

NY- Buy (1)- An uninspiring session yesterday saw NY close 1 cent higher on low volume, driven primarily by the USD. Macro data from Europe this morning may give some direction as Industrial Production numbers jumped by the most in 20 years. This should help soothe some of the periphery fears and give some strength to the Euro. From a technical perspective, the door is open now for a challenge of the 137 zone in May, with the contract having closed above 133.50 last night. Coupled with a better macro outlook and weaker dollar this should all work in its favour. To the downside, 130 still remains the lower consolidation zone floor; it remains to be seen whether 133.50 can lend any worthwhile support.

Liffe- Neutral- Disappointing volume and market activity in LDN yesterday came as a result of Vietnam stockpiling uncertainty. Amid such a backdrop, it is difficult to gauge any real direction and technically speaking, the last few days trading have not been particularly significant for the chartists. As such, we choose to remain neutral for the time being, noting that any breach and close of resistance at 1280 and 1300 could signal an end to the downtrend and potential medium term reversal. To the downside then, the bears will still be targetting the 1200 support.

Daily Coffee Market Outlook

NY- Neutral- The 'C' couldn't quite capitalise on Tuesdays gains yesterday with the board finishing broadly unchanged. However, sentiment does appear to be changing somewhat as traders discuss upside potential rather than the next leg lower. Despite the failure of May to close above 133.50, there is certainly room for further gains if the USD can give the board a helping hand. The next target once 133.5 is convincingly breached lies at 137-138. To the downside, strong support and the lower end of the current sideways trend lies at 130.

Liffe- Sell (1)- Many commentators are beginning to turn slightly bullish of LDN following Tuesdays rally and an improving technical picture. The stockpiling 'rumours' coming out of Vietnam are certainly making shorts think twice. However, yesterday proved just how difficult it is/will be to completely reverse the downward trend- and on an intra-day basis, we still see the prospect of further falls until the stockpiling scheme gains more substance and we see a convincing close above 1280/1300. The target remains for us at 1200 on the downside, but we'd be willing to mark an about turn should things develop in Vietnam.