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.

Daily Coffee Market Outlook

NY- Sell (1)- Yesterdays session saw NY trade a relatively tight range and close almost unchanged 0.15 cents down in DEC. Overnight, Asian stocks lost ground with shipping stocks and shipbuilders leading the way on increased uncertainty over the strength of the global economic recovery. Traders look on today as they await housing and manufacturing data in the US and also look to tomorrows US GDP 3rd Quarter figures- if the UK data is indicative of the world economy as a whole, recent gains in equities and decline in the dollar could reverse and take ICE 'C' with it. As such, we expect a reasonably choppy session as specs reposition in anticipation of these numbers; the commodity picture is down as a whole and we look to 133.5 support- a break of which could send Dec tumbling into the 120's. To the upside, a close above 140 will be needed to give encouragement for a rally to that important 146.50 resistance hurdle, but this seems a long way off as things stand.

Liffe- Sell (1)- Despite Ldn's agressive short squeeze amid stop triggering yesterday, the rally was short lived and Nov closed below the important 1400 resistance hurdle. In the face of a stronger dollar, weaker equities and indications that there will be a world robusta surplus in 2009/10 it is looking unlikely that the market will challenge the 1528 key level in the short term. The 1330/40 support is firmly on the radar and we see the chance of a further slide towards here over the next few sessions. Nov needs a definitive break through 1440 to change our outlook, but until then we are sellers with our eyes on US 3rd Quarter GDP tomorrow.

Daily Coffee Market Outlook

NY- Sell (1)- Following Fridays sell-off, consolidation was not to be unexpected yesterday, especially with nothing in the way of macro data billed to be released. Highs were reached early in tandom with the dow that was up 100 points at one stage before staging an about turn in sympathy with the dows' reversal to minus 100 points. Amid lack of macro data, comments by the government talking of a possible withdrawal/non extension of homebuyer credit set the tone for the day as moves were exaggerated with low liquidity. Volumes remained light and choppy trading was a theme for the session. Like Monday, macro data is somewhat thin on the ground today and we expect thin trading once more; with little else to watch, we look for guidance from the dollar and oil. Resistance remains around 139/140 and we are sellers of rallies up here. To the downside, support remains at 133.50, a break of which may arouse short covering from the increase of longs highlighted by yesterdays COT report.

Liffe- Neutral- Despite early weakness yesterday, Nov LDN rebounded, effectively testing support at 1330 and resistance in the 1380's amid choppy trading. In such quiet markets, the potential today is for further consolidation between 1330/40 and 1380/1400; by the same token, low liquidity may also exaggerate movements so we look for stop triggering through 1330 or 1380. As such, we choose to remain neutral today and wait for a break (and close) of either level before embarking on a strategy. Beyond 1330, next resistance lies at the years low of 1275; to the upside, through 1400 your next supply comes in at 1440.

Daily Coffee Market Outlook

NY- Sell (2)- Friday trading came as somewhat of a surprise with regards to the scale and agressiveness of the pullback. Dec closed 650 cents down on the day amid stop triggering below 140 in thin trading volumes. We had previously been looking for a further assault on 146.5 but the market had other ideas and with the 139/140 support level now broken one feels that the next direction is likely to be down. Surprisingly, the dollar was on the back foot and stocks were relatively unchanged during the move- whether this indicates the relationship between NY and the dollar/stocks is breaking down remains to be seen and will need to be monitored over the coming week. Nothing of note was said over the weekend by any influential economic bodies and with no macro data set for release today technicals are likely to be the driving force of ICE 'C'. We look for weakness below 138/139 as support becomes resistance and we are sellers on rallies. To the downside, resistance lies firstly at 135.5, then 133.5 followed by 129. We would not be surprised however of some consolidation in the near term and a relatively quiet day today following Fridays shennanigans.

Liffe- Sell (2)- LDN collapsed Friday in line with NY as stops were triggered initially below 1428 and then once more below 1400. Support at 1388 was easily overcome and Nov finally closed at 1363. With key support levels broken we expect further weakness accross the board; in Nov, next support lies in the 1330/1340 zone which we see as being in danger of being tested today. If it were to be breached then there is nothing really to stop the market testing the years' low at 1275 (June 25th)- and this is very much a possibility if NY continues to probe lower. To the upside, 1388 should cut short any recovery.

Daily Coffee Market Outlook

NY- Neutral- NY consolidated its' position above the 139 threshold yesterday despite showing signs of early weakness; by the afternoon/evening Dec staged a fightback and the contract finished just 65 cents in negative territory. One might speculate that the market has found its level for the time being above 140 then. If only for lack of data/comments in the market we choose to remain neutral for todays session, noting that the market could go any direction within a couple of cents. The dollar looks likely to play a role once more- to this end then, it might be worth taking a look at views of ECB Governor Trichet last night who commented about 'excess currency volatility'; this seems odd considering the VIX is sitting at a year low, so one must conclude that he is talking about the absolute level of the Euro vs. the Dollar. However, appeals to the US to stabilise the dollar have fallen on deaf ears and thus we see further dollar weakness as a clear possibility. Looking to the medium term, we remain bullish above 139 and look for a challenge of 146.50 where a break brings 151 into play.

LDN- Sell (1)- This mornings UK GDP first estimate fell well short of analyst estimates at -0.4% growth, confirming fears that the recovery will be a slow and painful one. However, despite drops in the pound against the major currencies, the FTSE has remained resilient. One might speculate then that the QE programme looks likely to be extended, despite thoughts to the contrary, thus bolstering the stock market. Although unlikely to affect Liffe, it is an interesting footnote; and warning that the world economy is not out of the woods yet. LDN looked weak yesterday, and despite holding above 1428, in the short term, further falls appear likely. As such, we envisage a challenge of 1428 today, where a close below brings the 1300's into focus. 1388 is your next support, followed by 1336. Were a turnaround to occur, 1488 remains the first supply point.

Daily Coffee Market Outlook

NY- Sell (1)- NY had a strong close yesterday finishing 250 cents up on the day despite early weakness, most likely on the back of a waining dollar. Down days followed by up days seems to be the trend this week as the market consolidates and decides which way to go next. Overnight data releases saw China's economy expand at the fastest pace in a year as stimulus spending and record lending growth helps the nation lead the world out of recession. Rather than bouy Asian equities however, stocks dropped and the dollar rose on concern that the acceleration in China's growth will spur policy makers to consider withdrawing fiscal and monetary stimulus in the coming quarters. Conversely, Beige Book data from the US last night was labelled by some market commentators as disappointing; the problem for them is that market expectations for growth in the US economy are running far ahead of those expected by the central bank. And quite justifiably so- as government support programmes expire, activity seems to evaporate. If the pick up is not self-sustaining rate hikes will be put on hold. The dilemma in China and the US is this: if monetary policy is tightened, there is a high possibilty of a second dip next year; and if we continue loose policy, another asset bubble might not be far away.
We see weakness in NY today on the back of a strong dollar and weaker equities. However, as long as we hold above 138/139, we see potential for the uptrend to continue and still look for our break of 146.5.

Liffe- Neutral/Sell (1)- The ebb and flow of the LDN market has been rather unspectacular of late, providing very little in the way of technical signals to give an idea of its' future direction. Despite interesting developments in the global macro picture, we don't see much changing the current trend in the short term. Record stocks on Liffe are likely to weight the market for the time being; conversely, a weaker dollar and strong performance of the commodity complex of late is likely to give LDN some support. As such we remain neutral and look to NY to give us an idea of todays short term direction. 1428 remains as downside support, followed by 1388. 1488 then 1528 are your resistance levels.

Daily Coffee Market Outlook

NY- Buy (1)- Yesterdays pullback in NY was not unexpected following Mondays' challenge of the 146.5 resistance hurdle. Many traders will have considered the failure to break that level as a sign of the rally faltering; and taken profit on longs accordingly. Coupled with worse than expected US Housing Start data, a stronger dollar and weaker equities, the only way was down. In spite of this, we remain bullish and see it as only a minor set-back. Above 138/139 we look to the upside; first a challenge and close above 146.50, then the target becomes 151. Following from patterns since the beginning of October, we very much see the trend as your friend.

Liffe- Buy (1)- LDN has been rather hard to judge of late and yesterday was no exception, with Nov retreating $15 on settlement, very much following the lead of NY. Nov is caught in a tight congestion zone between 1488 and 1428 and giving very little in the way of clues as to which level it will break. We remain bullish, but mainly based on the expectation of further gains in NY and further declines in the dollar. Were Nov to dip below support at 1428 a probe into the high 1300's becomes more than likely and we may begin to change our outlook. For the moment, look for another challenge at the upper end of congestion and 1528 in the medium term.

Daily Coffee Market Outlook

NY- Buy (1.5)- Another strong day on ICE 'C' yesterday with gains of 140 cents. Dec Rallied to a high of 145.40 in early trading, around 1 cent short of our resistance target at 146.50. The focus this week is on Q3 earnings and this gave market players the impetus yesterday with strong results from the likes of Apple, Texas Instruments and the German carmaker Daimler. We see further scope for good results this week as seems to be the trend of late and this should provide NY with some near term support. We remain bullish, but note the possibility of some profit taking in the short term; a close above 146.50 is the goal, and this should open the door to gains of up to 151. To the downside, we see support at 138.50- any dips towards here should be considered a buying opportunity.

Liffe- Buy (1)- LDN has appeared to lack any sort of firm resolve to push on throught the upper limit of the pre 1488 congestion zone in the last few sessions. Yesterday gave a textbook example of what happens when the market has little technical or fundamental impetus to give direction; Nov closed at 1461, just $1 up on the day. We remain bullish on the back of stronger expected earnings and the resulting weak dollar and higher equities; NY strength is also likely to lend support. However, we see little else to provide direction. As such, our bullish outlook is somewhat weak. Look for strength, and a break above the 1488 resistance to perk interest once more; otherwise consolidation between 1488 and support at 1428 is likely.

Daily Coffee Market Outlook

NY- Buy (3)- ICE 'C' shook off earlier consolidation below 139 on Friday, triggering stops and short covering. Our initial resistance target of 141 was easily breached and the market enjoyed a close of 142.85, 510 cents up on the day. The situation in Brazil appears to be the main driver of Fridays' move, where the 2010/11 crop looks unlikely to return a record output as rains compromise the coming harvest. This, combined with a further reduction in US green coffee stocks sent the contract Northwards. Amid further earnings results this week and a weak dollar, we see the potential for Dec to reach our second resistance target of 146.50; a breach and close above here would set the stage for a challenge of 151.5.

Liffe- Buy (2)- London staged a small rally Friday, bouyed notably by strong gains seen in NY. November closed $17 up on the day and we expect a challenge of 1488 resistance in the next few days. This has proved to be a stumbling block of late, but with oil rising to a year high of $79 per barrel and the dollar suffering once more, this should prove to be a formality. We then look to 1528 and a close higher to signal the sideways consolidation as being well and truly behind us. With no technical impetus and specs noted as being sidelined, we look to fundamentals and US earnings to give us some momentum. Failure to break 1488 and the 1400 level comes into play once more on the downside.

Daily Coffee Market Outlook

NY- Buy (2)- Yesterdays' reading of the FOMC minutes revealed an unexpected dissonance between the committee members with regards to the QE programme and asset backed security purchases. The disagreement at the FOMC suggests to short-term traders that the Fed is nowhere near any decision to move rates and they threw the dollar overboard. With no chance of currency intervention due to the instability it might trigger and Fed disagreement, what is left to hedge with- gold, oil, or even coffee?! We retain our bullish outlook then, and see dips as a buying opportunity once more. Weakness has appeared to draw spec interest of late and we do not see that pattern changing in the next few sessions. Technically speaking, it appears as if the 138/139 are proving stubborn hurdles; however, with continued dollar weakness this should prove to be a short term problem, and we look towards 141 initially followed by gains to 146.5.

Liffe- Buy (2)- Despite Mondays' aggressive fall to 1388, the market appears to have stabilised somewhat having cleared a number of large stops. Momentum appears to be to the upside once more as fresh specs enter the market at relatively 'cheap' levels. For the bulls to maintain this momentum Nov needs to close and hold above 1440 for the next few sessions- this would prove Mondays retracement as a false break in a technical sense and attract further programme interest. We look for gains to 1480 and then to that sticky hurdle of 1528. To the downside however, further tests of the 1380 area might prove to be the bulls undoing. We look for inspiration from the dollar and ICE 'C' once more.

Daily Coffee Market Outlook

NY- Buy (2)- Yesterday saw choppy trade accross the board in NY as early strength turned to weakness before a recovery ensued in late trading. A weak dollar was the order of the day (again), and one must wonder how much further the greenback has to fall; albeit, how much longer ICE 'C' can react to it. Overnight macro data showed that China's exports fell less than economists estimated and exports dropped the least in 11 months in September, adding to evidence that the global economy is emerging from its deepest post-war recession. Import gains show that China is playing a greater role in driving the recovery in both the region and the global economy. All this of course is a positive for equity markets, and, you guessed it, a negative for the dollar. Despite a hesitation to rally and amid choppy trading, we remain bullish for NY and see any dips as a buying opportunity- as surely do others- arguably why the market recovered so strongly in afternoon trading yesterday. To the upside, resistance lies at 141 and 146.5. To the downside, be wary of any breaks below support at 133.5.

Liffe- Buy (1)- Yesterdays dip that took place hand-in-hand with NY weakness broke through 1445 support in spectacular style as some 300 stops were triggered to the downside. This sent LDN tumbling to 1388 before regaining its composure somewhat and recovering back towards the 1440 level. The market appears to be well and truly stuck in what can only be described as a loose consolidation zone between the high 1300's and the high 1400's. However, despite only a 'weak (ish)' conviction we still see LDN as having the potential to challenge the September highs once more and regard yesterdays price action as a mere setback on its upward path. Bargains were there to be had yesterday and stopcatchers did very well indeed. To the upside, we look for a challenge and break of 1488 for a rally to 1528- amid strong equities and a weak dollar, this is achievable in the short to mid term. To the downside, a challenge of 1340 support would see us adjusting our focus.

Daily Coffee Market Outlook

NY- Buy (2)- There was thin trading accross the board yesterday as the US enjoyed its thanksgiving holiday. Morning weakness turned to afternoon strength as the Dec contract, encouraged by a weak dollar, finished up 240 cents, closing just below earmarked resistance at 138.30. According to data compiled by Bloomberg, central banks are moving away from the dollar at an alarming pace. Nations placing new money in reserve reportedly moved 63 percent into the Euro and Yen in the period from April-June this year; one feels that as long as abundant dollars ar available at no cost the world is not so likely to perceive them as the predominant reserve currency. In light of this and the effect a weak dollar is having on ICE 'C', we see this as extremely bullish for NY. So long as a close above 138.30 is achieved today, look for fresh highs to 141.70 and a possible medium term assault to 146.50. On the downside, expect to see demand at 133.50.

Liffe- Buy (2)- London finished up $9 dollars yesterday, and it is beginning to look as if a base is being formed above 1445, the key level of the past few weeks. With the dollar on the back foot and not looking to take the initiative any time soon, we are reasonably bullish for LDN. However, the market does apear to be in some sort of a consolidation phase between 1445 and 1528; as such we would look to exploit this by buying any dips towards the former, the initial target becoming the latter. NY is likely to give some direction to the market and further strength should give LDN the encouragement it needs. A break above 1528 opens the door to 1545 initially, then stronger supply is expected at 1590. To the downside, 1445 and 1400 are your support levels.

Daily Coffee Market Outlook

NY- Sell/Neutral (1)- The US market holiday should keep volumes light on ICE 'C' today following the previous weeks rally. Bernankes' comments on Friday hinting at interest rate rises sooner rather than later will likely weigh on the market and keep speculative interest looking to the downside. Failure to break and hold above 138.5 resistance may prove to be critical and we see potential towards 133.50. On the upside, the consistent weakness of the dollar and rallying stock market indices could give the market stability in the face of this downward pressure. On the whole and in the face of low interest, we maintain a neutral albeit bearish stance today and look for dips towards 133.50 as a buying opportunity.

Liffe- Sell/Neutral (1)- Like NY, we see very little reason to get excited in LDN today in the face of the US holiday. Volumes are likely to remain light, and interest reasonably low. The dollar weakness looks to continue playing its' bit-part in the steering of LDN as is any continuing equity strength. We highlight resistance at 1488 and then further to 1527 on the upside; to the downside, 1445/50 and 1400 are likely to give some semblance of support.

Daily Coffee Market Outlook

NY- Sell (2)- US Non- Farm Payrolls, arguably the highlight of the months macro economic data get release today and analysts are expecting another rise in claims and further job losses. Speculation is beginning to abound that rising unemployment will dampen global economic recovery; combined wit this weeks run of poor macro data gives enough reasons to doubt whether the scale of the rally in equity markets since march is justified. We continue our bearish outlook and look for further falls towards 119/120 on the back of a stronger dollar and weak equities.

Liffe- Sell (3)- Traders got the close they were looking for yesterday below 1372 opening the doors for further losses. In tandem with the beginning of the harvest and expectations of another bumper crop in Vietnam, weaker dollar, and weaker equities, we see the possibility of a fall to 1336, maybe even going into the end of the week. Technically, LDN looks very weak indeed.

Daily Coffee Market Outlook

NY- Sell (1)- ICE 'C' enjoyed an up day Wednesday closing 230 cents to the good on the close. However, coffee fundamentals appeared not to have been the driving force behind the rally, rather the weakness in the dollar that has been such an important factor of late. On the macro front, further good news came from the IMF who raised its forecast for global growth next year to 3.1%, up from its July forecast of 2.5%. Emerging Asian economies appear to be the main drivers of this growth, but the IMF warned that the recovery would be 'weak by historic standards' and said restoring banks to health remains a priority. Questions persist as to what the exit strategy from record government stimulus will be. As leaders congratulate themselves on the 'efficient' use of taxpayer money, saving the world from certain economic meltdown and returning a tidy profit while so doing, we ask the question- 'is the stock market rally the exit strategy'? None of this bodes well in the medium to long term for equity markets or the dollar. We continue our bearish outlook for NY, looking for further weakness to 119/120.

Liffe- Sell (2)- LDN didnt react as favourably to improved macro economic sentiment as one might have expected and volumes remained thin. Having said this, it appears equity markets and the weak dollar have been the main driver of LDN of late as opposed to fundamentals such as Typhoon Ketsana. It appears the market is 'waiting' for further speculative shorts to re-emerge; a dip and close below uptrend support at 1372 is likely to encourage the specs to get involved once more and we see further falls likely, initially to 1336, then 1275.