Daily Coffee Market Outlook

NY- Sell (3)- Following the US Thanksgiving holiday thursday, world markets were sent into a tailspin overnight as Dubai World, the ambitious property development asked creditors for an extension to debt repayments due on Dec 14th. The unexpected step has left analysts questioning debt across the region and could call into question hopes that the worst of the crisis is firmly behind us. In light of this, we are strongly bearish for the ICE 'c' market today and expect a sharp pullback across all commodity indices. 133 is the key support level to keep an eye on in March- a break through here could see the contract tumble all the way into the 120's.

Liffe- Sell (3)- In line with ICE 'c' and the commodity complex as a whole, we see the potential for steep losses in LDN today as investors reduce their exposure to so called 'risky assets'. In Jan, we look for a test of the lower border of the current range at 1295- a break through here opens the way for further losses all the way to 1220 then 1170.

Daily Coffee Market Outlook

NY- CLOSED FOR THANKSGIVING.

Liffe- Neutral- With the US closed today for thanksgiving, volumes in Ldn are likely to be very light. In light of this, we choose to remain neutral and see little chance of any meaningful developments. In Jan, resistance at the top of the range is at 1370; support can be found at 1295.

Daily Coffee Market Outlook

NY- Buy (1)- The last few sessions have seen ICE 'c' range somewhat, closing up or down on the whimsicle nature of the commodity complex as a whole as investors try to gauge the appetite of further gains across the so called 'risky assets'. To call commodities 'risky' is somewhat of a misnomer but alas they have benefitted hugely from the surge in equity indices and the weaker dollar and have cemented themselves as a inflation hedge. With no macro data of note due for release today, we look to equities for guidance and see the potential for small gains above 135.5 and more importantly, 133. To the upside, resistance can be found at 138.5 and then 141.

Liffe- Neutral- Floundering within the boundaries of the current range, LDN has given traders very little to get excited about. With no data to tickle the imagination, we choose to remain neutral noting support at 1295 and resistance at 1370.

Daily Coffee Market Outlook

NY- Buy (1)- As expected, ICE 'C' fell on Friday amid economic growth fears; Mar closing down 130 points on the day. However, support at 133 was not breached and as such, NY should halt the downward momentum for now and consolidate somewhat. Comments from Charles Evans, President of the Federal Bank of Chicago over the weekend are likely to bolster this support and may even create small upside gains. He told the FT that interest rates may remain near zero until late 2010, perhaps 2011, allowing asset markets and higher risk assets to continue to move higher. With this in mind, we turn our focus to the upside for today; 142 is the next resistance and is some way off, leaving NY scope to move higher reasonably unimpeded. A break of 142 would give scope for a further challenge of 146.5. To the downside, support lies at 133 then 128.

Liffe- Buy (1)- Despite early losses, LDN staged an afternoon recovery and actually finished up $17 in Jan. Following NY, we see scope for further gains today, albeit small ones on the back of weekend comments by Evans in the FT. However, fireworks are not expected and thus we see a continuation of sideways movement between 1295 and 1370. Until we get a break of either level, we refrain from making a more medium term assesment of market direction; however, judging from historic market data, it should be noted that prolonged sideways consolidation has invariably led to a break on the downside.

Daily Coffee Market Outlook

NY- Sell (2)- NY closed 3 cents down yesterday, declining as expected on the back of a resurgent dollar amid global economic growth fears. Today we see further declines accross the board as investors unload risky assets- ECB President Trichet signalled this morning that the central bank is unlikely to extend liquidity measures further in order to quell inflation concerns that already sent treasury yields negative yesterday. All this is likely to be very bearish for ICE 'C' which has benefitted favourably from the commodity/'risky asset' rally of late. We look for tests of support, firstly at 135.5, then further to 132.50; the latter could see stops triggered to the downside, which, in thin markets puts the 120's firmly into the fray. To the upside, resistance remains at 142 then 147.

Liffe- Sell (2)- We are becoming more negative LDN coffee by the day as dollar strength and equity weakness take hold. The pertinent question now being asked accross the market is 'has the rally come to an end?'. A rally that has seen equities rise nearly 60% since the beginning of the year. There is no doubt that a small correction to the downside looks imminent, but as with all these things, this will be tempered by future macro data releases and the accompanying market sentiment. In the short term then, traders appear to be reshuffling their exposure, getting rid of some of the more 'risky' assets that have benefitted so strongly from the rally. This will all impact LDN, and, with no important data scheduled for release today, we see longs liquidating somewhat going into the weekend. 1295 remains pivotal support to the downside, and it will be interesting to see if it gets tested once more- a break of which could send Jan down towards the 1200 level with little in the way of support to stop it. To the upside, the stability level of 1370 looks a distant prospect for now.

Daily Coffee Market Outlook

NY- Sell (1)- Yesterday saw a 'predictable' rally accross the board as dollar weakness and commodity strength gave NY a lift. However, in line with the topsy turvy week so far, we see a reversal today following economic growth concerns. Despite an upward revision in the OECD 2010 growth forecast, fears were aired overnight that the rally in equities/commodities has outpaced prospects for growth. Analysts noted markets have gone up quite aggressively in the last six months and now the time has come for a consolidation. In stock markets around the world, volumes have gone down recently and this may be a sign that a short-term top is very close. As such, we see weakness in Mar today (As first notice day for Dec draws near, so our attention shifts to Mar '10 as the front month), and look for support at 135.7 and crucially, 133. In order to keep momentum alive, we look for a break of resistance at 142. Above here, 147/148 and 152 are your next supply points.

Liffe- Sell (1)- Yesterday saw LDN manage a rally accross the board following NY, the weaker dollar and commodities as a whole. However, key resistance at 1370 wasn't breached, and reflecting concerns that the rally has outpaced the growth outlook, we see weakness today. Intra-day, the gap at 1339-1333 will be key main support in Jan followed by 1295; as noted, 1370 should provide a cap followed by resistance at 1400/1410.

Daily Coffee Market Outlook

NY- Buy (1)- When they were up they were up, and when they were down they were down; the nursery rhyme springs to mind when trying to describe ICE coffee this month. Fridays test (and culmination of the weeks' losses) of 130 has been followed this week by gains back up towards the high 130's. What has been driving this move? It is hard to say as fundamentals appear to have taken a back seat, but the resurgent commodity complex is likely to have played a starring role along with a weaker dollar amid no Chinese commitment to devalue the Yuan. Today see's the release of US housing starts and the all-important US CPI, both of which are likely to surprise to the upside, thus adding fuel to the risk rally and commodity surge. In a fickle market, we take a bullish stance and look for further gains above 133 and most importantly, the 130 level. Resistance is found at 139.50 then 146.

Liffe- Neutral- Following last weeks sell-off, LDN has been a little more predictable with a small recovery Monday and sideways consolidation since. Like NY, the market is looking to the overall commodity complex/dollar for intra-day direction, and between 1295 and 1370, we expect Jan to continue this sideways move. Medium term, the momentum appears to be to the downside, and the 1295 low is still very much at risk; which, if broken, will open the trapdoors to key support at 1160/70. We choose to remain neutral for now and look for a close above 1370 to give the market a semblance of stability.

Daily Coffee Market Outlook

NY- Neutral- The markets continue to surprise as ICE 'C' rallied an impressive 5.25 cents yesterday following last weeks retreat. Having held above key support at 130, shorts were squeezed and stops triggered as Dec settled at 136.35. Unsurprisingly, this came as the dollar weakened further against all the majors, sterling in particular. This is not without efforts to the contrary by the US government; Ben Bernanke pledged that the FED will help keep the dollar strong at the London close, even while reiterating that rates will remain low for an extended period. It is rare for the FED to comment on the currency, however, it is difficult to imagine that the FED chief has any other options to ensure dollar strength other than rhetoric, especially with the Chinese failing to give support.
Once more, we remain neutral today amid choppy markets. Support resides at 130, 128 and 125 while resistance lies at 140.5, 146.5 and 148.5.

Liffe- Sell (1)- Yesterdays strength did not come as much of a surprise following last weeks dramatic fall. The hold at the low of 1295 in Jan did give LDN bulls some encouragement but failure to close above 1370 key resistance will have taken the wind out of their sails somewhat. Although difficult to call in the immediate short term, we see LDN as a sell medium term as long as it doesnt break 1370- alas, consolidation below this level should only serve to encourage more shorts into the market for a challenge of that 1295 low once more. Below 1295, thereis nothing to halt a slide all the way to 1219 initially then 1170 is your next key demand point. To the upside, a break of 1370 may serve up a challenge of the 1400/1410 zone.

Daily Coffee Market Outlook

NY- Neutral- NY managed to hold above the crucial 130 level on Friday, closing at 131.10. However, with momentum firmly to the downside, we see a break of 130 a high probability. Dollar weakness is likely to play a role once more, as the possible revaluation of the Chinese Yuan after a meeting between Obama and the Chinese didnt materialise thus leaving the dollar on the back foot. We choose to remain neutral above 130 for the time being acknowledging the risk of sideways consolidation in the short term. However, a break below 130 could see stops triggered and Dec tuble to 125. To the downside then, support lies at 130, 128 and 125. To the upside, we would need a close above resistance at 136 for NY to regain a semblance of stability.

Liffe- Neutral- As in NY, LDN has experienced a week of heavy losses accross the board. That elusive 1527 level seems miles away as Jan narrowly held the June low of 1295 and in turn put the breaks on a fall into the abyss (for now). Psychologically speaking, this has the potential of encouraging somewhat of a recovery in Jan as bulls note that the 2009 low held nicely; however, the market will need to close above resistance at 1370 to regain stability and take back the initiative to the upside. We choose to remain neutral for now between 1295 and 1370. To the downside, a break below 1295 could trigger a wave of stops with nothing of note to halt the fall before 1219. At the other end of the scale, the distant resistance of 1370 will need to be reclaimed to put 1295 to the back of traders' minds. Medium term, we are bearish, and expect another assault of 1295.

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.