Daily Coffee Market Outlook

NY- Sell (1)- Market bulls embraced a small month over month uptick in the Case-Schiller index yesterday as further proof that all is well with the recovery. House prices rose 1.6% from the previous month, funded in part by a tax credit. Overnight data releases also heralded 'good news' as Chinese manufacturing rose and the IMF cut its' estimates of bank writedowns. Stocks inevitably rose on the back of this with Europes' benchmark index posting the best quarterly advance this decade, and the dollar resumed its' decline. Although sceptical the rally will continue at such a pace, it would be foolish to discount its' impact in the short term; As such, we see NY strengthening in very short term, and would look to sell rallies to 128.5/129. However, we remain bearish in the medium term with the future of the subsidy for first-time homebuyers uncertain as the US government is expected to hit its $12.1 trillion debt ceiling this autumn. Some analysts predict another downturn in house prices, barring any government intervention, while citing another two years of supply waiting to clear through foreclosures. We are looking for a challenge of 119/120; only a strong rally and close above 135 would have us looking to the upside once more.

Liffe- Neutral/Sell (1)- LDN continues to trade around the 1390/1400 area as opposing forces keep the market in a fairly tight consolidation channel. Indonesian selling came into the market late yesterday and anticipation of a strong crop number from Vietnam for the new season is of interest; however, the typhoon sweeping accross Asia and strength in equities/weak dollar looks to absorb supply and keep the market perky in the short term. With this in mind, traders are likely to be kept guessing, and as such we remain fairly neutral in the short term. Medium term, we see the possibility of a challenge towards 1275 pending a close below 1372. On the upside, resistance can be seen at 1420 initially, with stronger supply in the 1445/1450 area.

Daily Coffee Market Outlook

NY- Sell (2)- NY was reasonably quiet yesterday as traders looked to make sense of the G20 mumblings and dissect the impact caused by forex movements at the end of the week prior. The equity rally did little to perk the bulls into action and small selling of Dec continued, the contract finishing 55 cents down on the close. As such, we maintain our bearish outlook and look for a dip below support at 126 in the short term. A close below here leaves the market open to further losses and a possible test of the August base formed at 119/120.

Liffe- Sell (1)- LDN appeared to be bouyed somewhat yesterday finishing $5 up on the close. Most likely, this was supported by stronger equity markets and a weaker dollar. However, as we highlighted before, short term consolidation was predictable and the small rally does little to change our outlook. Should the market climb today, we look to sell rallies with a view to closing below the uptrend at 1370. Weak support lies at 1388. To the upside, only a close above 1445/50 would give the bulls renewed vigour.

Daily Coffee Market Outlook

NY- Sell (2)- Policy makers this weekend signalled the global economy isnt strong enough for governments to withdraw their stimulus measures. IMF Director Strauss-Kahn told a conference that policy makers 'need to secure the recovery before we address the problem of inflation and how to end stimulus packages'. The G20 leaders said they would 'avoid any premature withdrawal of stimulus' and acknowledged that the global recovery remains dependent on emergency government money. This leads us to question whether everything good that happened in the last six months is sustainable. As such, we remain bearish NY, keeping in mind the negative impact that these comments are likely to have on global equity indices and the strengthening of the dollar as a risk-aversion play. To the upside, 128.5 becomes resistance (moderate), followed by the 133.8 pivot where we saw downside stops triggered so dramatically on Thursday.

Liffe- Sell (1)- LDN closed unchanged going into the weekend on Friday halting the agressive slide seen last week. Despite early losses, support at 1391 held (albeit was not broken by more than $10 on the open), thus signalling stability for now. We remain bearish but acknowledge consolidation in the near term. 1420 will provide (weak) resistance to the upside before stronger supply at 1449. Look to sell rallies to 1449 with the goal of breaching (and closing below) support at 1391. A fall below here and 1336-1275 become our next medium term target.

Daily Coffee Market Outlook

NY- Sell/Neutral (1)- The G20 meet in Pittsburgh this weekend to discuss policy coordination and tighter banking regulation. Following the 'wait and see' attitude deployed at the Fed rate announcement, many commentators are looking towards a reversal in rates and a withdrawal of the extraordinary stimulus measures that have helped bouy demand for riskier assets. Kevin Warsh, the Federal Reserve Governor, said the US may need to be as aggressive in reversing its actions to revive the economy as it was in starting. The recovery in stock markets over the last six months will certainly have pleased policy makers; however, a U or even W shaped recovery is still a strong possibility. Amongst the posturing and congratulatory back slapping leaders this weekend ought to be wary of counting their chickens just yet.
Following yesterday 'collapse' amid stop triggering below 133.80, we choose to remain fairly neutral today. Our near term downside target of 128.50 was reached (and held), and we may see some consolidation above here in NY today. A close below however, and support and 119/120 from the previous uptrend comes clearly into focus.

Liffe- Sell (1)- LDNs' fall was just as dramatic as its rally seeing Nov drop around $100 this week. Selling was given momentum from a combination of NY weakness, stops below 1449 and dollar strength. Our noted support at 1391 held to the dollar however, and this may help to stabilise the market somewhat. In the medium term, we see further weakness as longs look to liquidate and certified Liffe stocks remain high; a close below 1391 brings support at 1336 firmly into view with the prospect of re-visiting the June low of 1275 a very real possibility. Short term however, look for sideways consolidation going into the weekend (G20) and sell rallies towards 1420/1449.

Daily Coffee Market Outlook

NY- Sell (2)- The FOMC said it will maintain its zero interest rate policy for an 'extended period' in a statement issued after yesterdays meeting. Although the committee recognises that the economy is likely to be weak for some time, it highlighted an increase in housing market activity and said household spending 'seems to be' stabilising. One begs the question, is Bernankes' optimism influenced only by a strong turnaround in the stock market? The apparent lack of conviction in the statement suggests the Fed may be playing for time after smoothing the road for 'market forces' to support a strengthening of economic growth. One thing is clear however, the US economies' return to growth is insufficient to withdraw stimulus just yet. We remain bearish NY in the short term and look to sell rallies noting resistance at 139. A close below 133.80 could see long covering and further losses to the 128/129.5 zone. A convincing close above 139 is needed to get the rally back on course.

Liffe- Sell (1)- LDN still looks vulnerable to further losses despite the breach of 1449 and subsequent rally on Tuesday. The sell-off proved to be somewhat of a false-break, the rejection of which creating a 'hanging-man' candlestick chart pattern. Despite the bullish ramifications of such a pattern, LDN has been unable to capitalise, aided in no way by the dollar or equity markets. Between 1449 and 1527, November Liffe appears to be 'in limbo'; a break and close through either level required to interest traders once more- low volume seems to reflect this. We remain bearish (albeit weakly), and see more risk to the downside.

Daily Coffee Market Outlook

NY- Sell (2)- NY surprised to the upside yesterday casting fresh doubts as to whether the recent rally has stalled or merely consolidating before taking another leg higher. A weaker dollar once more gave traders the encouragement they needed, coupled with equity strength and commodity strength overall. However, technically speaking, NY needs a close above 139 to signal a more significant Northward assault; 141 remains the first target, 146.75 further on. All eyes will be on the FED rate announcement this evening where the level is expected to remain unchanged. More importantly though are the comments released afterwards which some analysts believe will contain hints towards the future of quant easing (or lack of) and hawkish rhetoric. Short term then we are sellers towards 139 but loath to take a position overnight. Post announcement, we hope the medium term path of ICE 'C' will be somewhat easier to read.

Liffe- Neutral (1)- LDN suffered in early trade despite dollar weakness. However, by the time NY opened in earnest Robusta enjoyed a massive turnaround, rallying from a low of 1445 to a high of 1486. Thin trading certainly played a part in contributing to its volatility but one must assume that traders focussed on the NY rally as a guide to bargain spotting. This begs the question, has the rally well and truly ended or is LDN merely taking a breather and regrouping? I would argue the former but between 1449 and 1528 it remains anyones guess. Look to sell on a close below 1449 which would open up potential for losses to 1400 and 1350. Intra-day though, the range trade looks to be a strong play. As mentioned above, the FED rate announcement this evening could be pivotal.

Daily Coffee Market Outlook

NY- Sell (1)- Despite early gains, NY settled nearly half a cent down yesterday, most likely on the back of weekend commentary citing the equity rally/dollar decline as overdone. However, overnight, water was poured onto the naysayers fire as forecasts from the Asian Development Bank provided evidence that the global economic recovery is accelerating. Who should one believe in such a situation? This is a question we will leave to minds far more knowledgeable than ours. Nevertheless, ICE 'C' appears to have run out of steam somewhat with the 138/139 level proving to be stiff resistance. With this in mind and with bearish equity sentiment beginning to rear its' ugly head we see risks to the downside in the short term and look to sell rallies towards 138. Support lies at 129.50, and this would be our initial target.

Liffe- Sell (2)- LDN finished $34 down yesterday, breaching weak support at 1500 and the congestion zone at 1480. It appears that the combination of negative market sentiment over the weekend and inability to breach resistance in the 1520's gave longs all the evidence they needed to liquidate positions; and traders on the sideline the encouragement to jump into the market, albeit short. Support now lies at 1449- a close below here and there lies very little in the way of a fall down to 1400, the next level being 1340.

Daily Coffee Market Outlook

NY- Buy (1)- All eyes this week focus on Wednesdays FOMC meeting, citing the possibility that the FED committee could announce a change to the QE programme or otherwise signal a tightening bias. Commentators this weekend were speculating that the 6 month rally in equities has finally outpaced prospects for profit growth. Indeed, Joseph Stiglitz, the Nobel Laureate says the US 'would be lucky to be out of the recession by 2012'. Coffee has certainly benefitted of late from the equity rally and associated dollar decline; however, the correlation is often tenuous and sometimes coincidental. As such, we still remain moderately bullish NY, although see some prospect for sideways consolidation in the short term. Looking to the medium term, we eye a challenge of 141, (and short covering on triggered stops). However, the threat of bearish global market sentiment can never be ignored and as such would look to sell on breaks above 141 on a short term basis, especially if macro data began to point downwards once more.

LDN- Neutral/Sell (1)- LDN trade has not been so closely linked to NY over the last few sessions and this was especially evident on Friday when the market plummetted to 1480 ($44 down) before traders sniffed out a bargain and it settled only $11 down at 1513. Despite the afternoon recovery, it's hard to see much more potential to the upside in the short-term; upside momentum appears to have slowly disappeared and Nov has failed to breach resistance in the high 1520's in four of the last five sessions. Combined with what seems to be a shift in sentiment, our compass is beginning to shift Southwards. This is not to say that LDN will not go up- certainly, intra-day Nov has potential to close up a few dollars or so (or down, hence our neutral stance at these levels). As such, we would look to sell in the high 20's, eyeing a short-term pullback towards 1480/1449. A close above 1530/1545 would be needed technically before we start looking Northwards once more.

Daily Coffee Market Outlook

NY- Buy (1)- Another strong close for NY yesterday, up 1.85 cents, brought Dec closer to the August highs (and our highlighted resistance) at the 141 level. This came amid a backdrop of climbing stocks and a weaker dollar. However, early weakness in stock indices today and many analysts are pointing out that the rally is running out of steam; optimism regarding the economic outlook remains, but bullish sentiment is looking a bit premature. Concern that Lloyds needs to do more to clean up its' balance sheet revived speculation that financial institutions have yet to recover from the $1.6 trillion in losses and writedowns sparked by the seizure in credit markets. As a result, we see NY (which has benefitted greatly from recent bullish euphoria) consolidating somewhat going into the weekend. Support remains at 130, and we see dips in the short term as a buying opportunity. In the medium term, we remain bullish and look for gains to 141 and a challenge of the may/june high of 146.5.

Liffe- Sell (1)- Despite yesterdays gains and hold above resistance at 1512, resistance in the high 1520's is proving stubborn and difficult to breach. Most likely, traders are seeing this area as the perfect level to offload long positions and book profit. With the stock rally looking rather tired, we see some consolidation in LDN in the short term as the market takes a 'breather'. Medium term, 1545 is still in range; however, to continue the upward trend, and with no macro data on the horizon, other factors such as a weaker dollar will need to lend a hand. We look to (weak) support at 1500, and failing this, the next level is at 1449.

Daily Coffee Market Outlook

NY- Buy (3)- NY had a fairly subdued day yesterday and closed relatively unchanged at 134.20, 0.4 cents down. Of note, were comments by former FED Chairman Greenspan who said that the next six months 'seem reasonably easy to anticipate: no inflation, good economic growth.' The former FED chiefs thoughts compared favourably with some analysts whose explanation of stock market gains centred around investors' belief in a strong recovery with low inflation. Perhaps the small fall in coffee reflected lack of interest in buying as an inflation hedge; more likely however, was a dip caused by longs taking profit. Despite this, we see further stock market gains, weak dollar and investor confidence as a positive for ICE 'C' and remain strongly bullish; near term, the target remains at 141, but note potential origin supply around the 138/140 level.

Liffe- Buy (3)- Technically speaking, yesterday was significant for LDN. We got the close we have been looking for at 1512, $10 up for the day. With this resistance level breached, we see further gains in the near term, and look for a rally towards the July highs of 1545. As in previous sessions, supply will begin to emerge at 1526/1528.

Daily Coffee Market Outlook

NY- Buy (3)- A bullish commodity undertone prevailed Tuesday, led by oil, a weaker dollar, and stock market rally; NY settled higher once more at 134.60, 1.5 cents up on the previous days' close. The rally centred around the unexpected jump in US Retail Sales figures, the highest margin in 3 years. Enthusiasm was spurred further as FED Chairman Ben Bernanke commented that the recession could be over by now; even cautionary notes that the recovery will be slow and unemployment will continue to be high into the foreseeable future couldn't dampen spirits. With heightened consumer spending and the associated inflation expections, coffee benefited; and we see this trend continuing into the short term. Resistance lies at 141, and this is our target for now. With support at 129/130, we see any dips towards here as a further buying opportunity. Supply could begin to filter into the market from 138 onwards as origin sellers look to take advantage of higher prices, however renewed spec interest could absorb this.

Liffe- Buy (2)- Despite early strength and attempts to breach resistance at 1512, LDN couldnt take the initiative once more and it settled at 1502 ($3 down), but to all intent and purposes, relatively unchanged. With NY on the offensive, one would think LDN would follow suit; however, one must bear in mind that LDNs' move came the two weeks preceeding ICE 'C' and it has done $100 to date in September. We remain (stubbornly) bullish above 1449, and see demand appearing around 1480. Once more, the stability hurdle stands at a close above 1512 for gains towards 1545.

Daily Coffee Market Outlook

NY- Buy (3)- Monday was all about ICE 'C'. Dec NY traded at a 1 month high yesterday to close at 133.10, 6.5 cents up on the day. The move initially came through low liquidity and soon gained momentum as stops were triggered through the 129/130 resistance area. Lack of origin selling contributed to the rally led by fund buying and short-covering. With the 129/130 level well and truly breached, we see little in the way of resistance to halt the market onslaught and see further gains to 141. We would look to buy dips ahead of 130 using 140 as a profit taking opportunity; we note, however, low open interest could indicate the rally may run out of steam before this level.

LIFFE- Buy (2)- LDN, bouyed by the strong NY rally climbed to within $2 of 1512 resistance yesterday before pulling back and settling at 1505. We are bullish, and have been for some time, however, the elusive close above 1512 needed from a technical perspective has not materialised (yet). Once more, there is little to drive the market fundamentally and so eyes will be drawn towards dollar strength and stock market direction. NY may provide the biggest cue however, and further gains may give LIFFE traders the encouragement needed for a rally towards 1545.

Daily Coffee Market Outlook

NY- Buy (3)- We remain bullish NY despite dollar strength and morning session weakness. Fridays' close above resistance at 126.40 was technically significant and opened the way for further gains. Our short-term target lies at 129.50, and traders will have this level firmly in their sights; a close above here would open the doors to the August highs of 141 with very little in the way of resistance to scupper its progress. With very little out this week data wise, eyes will be firmly kept on the dollar and the stock markets for inspiration.

Liffe- Buy (2)- Ldn kept traders guessing once more with a rather non-descript albeit positive session finishing $10 up on settlement. This could be described by dollar weakness rather than any fundamental shift in market perceptions. However, while LDN holds above support at 1449, we remain bullish in our outlook and look at dips towards this level as a good buying opportunity. Further dollar weakness/stock market strength could drive the market higher this week with little in the way of macro data to arouse interest. To the upside, a close above resistance at 1512 remains pivotal, and from here we could see gains to 1545.