Daily Coffee Market Outlook

NY- Sell (1)- Yesterday saw miniscule volume accross the board as traders effectively shut-up shop. Weak housing data in the US attracted some interest as small specs covered shorts amid the weaker dollar but the market was caught in a very tight range. Going into year end, we see the prospect for continued weakness as March holds below 144.00 once more, and this could just provide the trigger for some of the highly exposed funds to dump some of their longs and re-balance the books somewhat while waiting for fresh developments going into 2010. Resistance lies at 144, followed by 146.5 and 150. To the downside, we see support at 140-138, followed by 135 and crucially 133.

Liffe- Sell (1)- Ldn managed respectable volume yesterday as the recent market lows keeps traders interested. March failed once again to close above 1340, the key stability zone and as such we see the possibility of further weakness going into year-end. Todays flows are likely to be made up of book-rebalancing and position squaring but following the good volumes we have seen on Liffe over the last week, don't rule out a flurry of action to move the mkt before todays close. Key levels to watch then are the 1340 resistance level, followed by 1425 much further off in the distance. To the downside, 1300 should provide some semblance of support, but other than that, there is very little notable technical levels of note.

Daily Coffee Market Outlook

NY- Sell (1)- NY is beginning to look weak as Liffe drags it down on the back of a weak dollar and fundamentals. Stops were triggered yesterday through 144 in March and followed continued towards support at 140 before buyers stepped in to halt the rout. According to market commentators, the bulk of the stops came from funds, which currently hold a large gross long position. The dollar then will be key today and further weakness could pose a threat to the 138-140 support zone. Should that be breached, next support lies at 135 before the key level at 133. To the upside, supply mounts, and 144 becomes resistance followed by 146.5. We choose to side with momentum today and believe risk lies to the downside.

Liffe- Sell (2)- There was impressive volume in LDN yesterday despite many traders being out of the market. The weak dollar and breach of key support at 1340 in March led to a swathe of fund selling and speculative sell-stops. March managed to salvage some composure as the contract recovered from the low of 1309 to settle at 1328, but the risk remains firmly Southwards. Should we get another close below 1340 today, this will surely set the tone going into year end and we may see plenty more long liquidation, knocking the contract down yet further. The BOE minutes released this morning may provide some rest-bite as the concensus to maintain rates and quant easing went to 9-0, but with lack of spec interest, the impact is likely to be limited. We remain sellers and look for another close below 1340.

Daily Coffee Market Outlook

NY- Neutral- Momentum appears to have disappeared from the market as we approach year end, with the major players and short-term specs looking decidedly absent from the market. Looking at the Arabica market fundamentals, Fortis's Agricommodities monthly report points towards a 10mio bag surplus in 2009/2010. However, amid the backdrop of heavy rainfall in Brazil creating uncertainty and erratic flowering, this surplus has not weighed on the market yet. Alas, expectations amongst all the major banks is for prices to reach 170 in their 2010 forecasts, and so it will be interesting to see how the situation develops in the long term. At present, the market is following macro-economic developments extremely closely, and any equity market rally/drop is shadowed closely by ICE 'C'. The dollar has also played its part, albeit, in the last week or so, its' dramatic resurgence has had a relatively small impact on ICE as short term specs shut-up shop for the holidays. Today, we see little chance of fireworks, and look for only small moves in either direction if they do indeed develop. Support comes in now at 144 (weak) then 140. Commentators suggest that March will need a sustained bout of settlement below 144-140 to encourage longs to exit. To the upside, resistance lies at 148.

Liffe- Sell (1)- Ldn has come under pressure the last week or so as it follows developments with the greenback. Drier weather in Vietnam has added weight to this downward momentum and March hangs tentatively above key support at 1340. Despite declining volume and trader participation, this downward trend looks set to continue, and any settlement below 1340 could induce a further wave of selling as longs look to liquidate going into year end. Amid this backdrop, barring any steep declines in the dollar over the next couple of sessions, we must turn our outlook Southwards and look for further losses. Support then lies at 1340; below here there is very little in the way of technical support to halt the decline. To the upside, March needs a strong close or challenge of 1425 resistance to unsurp the bears that begin to smell blood.

Daily Coffee Market Outlook

NY- Neutral- Despite fundamental data released on Saturday indicating that 2009/2010 crop estimates will be revised down, the market looks set to follow the dollar and any macro-economic data released in the US. Sock market indices and consumer confidence have been driving the market for the last few months and this phenomenon looks set to continue. Overnight, Asian equity indices all posted gains, and early European trading has continued this positive theme. Bearing in mind that daily sentiment can change in a heartbeat, we choose to remain neutral today as the festive season reduces market interest further, and noting that dollar moves in either direction will take ICE 'c' with it. Support in March lies at 140 while resistance remains at 148.

Liffe- Neutral- March encountered further losses on Friday as the dollar resurgence continued. This has brought the key 1340 support level into play and opens the possibility for a challenge to the 2009 lows if enough market interest can be mustered to sniff out stops to the downside. Sharp moves characterised the LIFFE market over the summer as soon as short term specs 'smelled blood' and the potential to profit from high or low-ticking. We remain sceptical that traders will be around in large enough numbers to move this festive market but the possibility is always there. We choose to remain neutral today and look to the dollar and stock markets for inspiration. Support lies at 1340 while resistance can be found first at 1390 and then at 1425.

Daily Coffee Market Outlook

NY- Neutral- Dollar strength has been the theme this week as the greenback gains against all the majors. Interestingly, this has come despite the FOMC pledging to keep rates low for an extended period (the market believing the contrary after unemployment data) and was the whole basis for the rally in the first place. This ties nicely with views expressed last week; in this market, the trend is your friend- traders first bought dollars as a yield play, they then hoarded dollars as a risk play, despite more positive than negative data appearing this week. Amid such a backdrop, ICE 'C' has held on to its gains remarkably well. However, if the dollar continues to strengthen into year end as Investment Houses balance their books (which we expect), then a steeper fall in NY could be yet to come. We choose to remain neutral today for lack of volume and real interest in this festive market. However, the greenback should be monitored for clues as to the markets next direction on an intra-day basis. Support remains at 138-140 while resistance can be found once more at 148 in March.

Liffe- Neutral- Severe lack of interest accross the board sums the weeks trading up nicely. However, March still came off $20 dollars yesterday on the back of the strong dollar as traders liquidated longs and stepped to the sidelines going into year end. As the greenback rebalances, the risks for Mar LIFFE appear to the downside; 1380 could provide the trigger were it to be breached, bringing key support at $1340 into play. With so many stops expected below here, amid thin trading, the downside reaction could be severe. We choose to remain neutral today, but with eyes to the South. Support remains at 1380 and crucially at 1340. To the upside, supply can be found at 1425.

Daily Coffee Market Outlook

NY- Sell (1)- Yesterdays session focussed on the FED rate decision and accompanying statement at 19.15 GMT. The grennback remained on the back foot throughout the day but flow was light accross ICE 'C' and and the market struggled to build on Tuesdays gains. As expected, rates were kept unchanged and the FED rate setting committee indicated that rates would remain at historically low levels for the next year or so. Most notable perhaps was Bernanke's statement regarding emergency funding and the plan to withdraw it as planned in Feb due to improvements in the economy. Overnight, the landscape changed once more as Greece was downgraded prompting traders to pile into the dollar/yen once more as a risk play. It seems then, as Spain and the UK emerge in the distance as possible victims to a downgrade, that the greenback rally is not over yet. All this should keep ICE 'C' capped for the time being. As such, we are sellers today and look for challenges of weak support at the 146 area.

Liffe- Sell (1)- LDN has relly failed to join the party in the last week or so as the market slows for the festive season. Unlike NY, gains have been modest and flows extremely light. Even the FOMC meeting failed to set the world on fire. Despite this, with the dollar on a tear, we see the potential for a slide in LDN but expect flows to be light. March will be capped by resistance (still) at 1425. To the downside, support lies at 1392 and 1340 (critical).

Daily Coffee Market Outlook

NY- Buy (1)- Ice 'C' managed a strong rally accross the board yesterday breaking through key resistance at 146.5 and 148 in March to settle at 148.20. This came despite losses on all of the major equity indices and a resurgent dollar. We expect much of the same today pending the interest rate announcement tonight from the FED. Bernanke and his cronies look likely to say growth is accelerating while repeating the pledge to keep the target rate for overnight bank loans near zero for an 'extended period'. In terms of coffee and all growth sensitive assets, another year of low rates should underscore the market and maintain prices on an upward trajectory. As such, we remain buyers of NY; we begin to enter somewhat uncharted territory resistane wise now so expect supply to come in around 152. To the downside, support can be found at 146.5 and 140.

Liffe- Buy (1)- March was capped by resistance yesterday at 1425, the December high posted on two separate occasions this month. However, bulls were unable to hold on to these gains and the market swiftly retreated to around the 1400 level. We see potential for further gains today, albeit in slightly less dramatic fashion; stops appeared to have been cleared in NY which dragged LDN with it, and volume will indeed be light as we move closer to Christmas. Resistance then stays at 1425 with little else above here before 1515. To the downside, support can be found at 1392 (weak) and 1340 (critical). With momentum now firmly to the upside, not even a dramatic dollar correction is likely to send March down to its' 09 lows before year end.

Daily Coffee Market Outlook

NY- Neutral- Commodities rallied accross the board yesterday as the market breathed a cumulative sigh of relief over the Abu Dhabi Dubai World debt refinancing agreement. ICE 'C' March managed to rally 3.25 cents as equities climbed and the recent dollar rally was halted. However, March was capped at 146.60, the first resistance hurdle, and settled at 145.90. With this in mind, March sits uneasily, and there is potential for some sort of pullback as the market takes stock. Today sees the release of US PPI and Industrial Production data, both of which can shed more light on the state of the economy since the improved job-market figures at the beginning of December. With the dollar reverting to 'pre-crisis mode', following yield developments as opposed to getting sold on better economic data, trading the data is tricky. No-one can quite be sure of how the market will view the dollar if the numbers are indeed better; as the relationship breaks down then, better data may indeed result in dollar appreciation and commodities getting SOLD. As such, we choose to stand on the sidelines today and watch developments unfold. Resistance remains at 146.5, followed by 148.5. To the downside, support can be found way down at 140-138, 135 and crucially, 133.

LDN- Neutral- Volume was very low on LIFFE Robusta yesterday as the market winds down for the festive season. The resulting range was tight in March with the majority of flow arising from the Jan/Mar switch. Although the market benefitted from early dollar weakness on the Dubai World story, lack of volume (and trader interest) meant that there was no real momentum behind the move and March was only able to post an $8 gain on settlement. Despite some juicy macro data from the States, we expect much of the same today and thus choose to remain neutral. Weak support in March now lies at 1392 followed by 1355 and crucially 1340. To the upside, resistance can be found at 1425.

Daily Coffee Market Outlook

NY- Buy (1)- Abu Dhabi provided $10 million to help Dubai World, the state owned holding company, meet its obligations last night. Dubai shares surged the most in 14 months on the news and Asian and US futures rebounded on optimism that the Emirates' debt problems wont spread to other emerging markets. The Greenback gave back some of last weeks gains overnight as traders repositioned themselves for the ensuing 'risk rally'. As such, we retain our bullish stance today and look for modest gains accross ICE 'C'. With no specific coffee news released over the weekend and no macro data (of note) due for release today, the festive markets and associated light trading are likely to shift into first gear. The dollar will dictate todays flow and should be watched for any hint of re-balancing as we near year end. Support in NY remains around the 138/140 zone, followed by 135 and crucially 133. To the upside, resistance can be found at 146.5 and 148.

Liffe- Buy (1)- Focus begins to shift towards the March contract now as we approach year end and January nears first notice day. Flow has been light across the board the last few sessions and volumes should fall yet further as the Festive seasons kicks in. The majority of trades will focus on the Jan/Mar, Mar/May switches as traders look to rebalance books and shift positions down the board. With little in the way of macro data, coupled with Christmas markets, the dollar looks to lead the way. In Jan, 1360 remains the demand zone and should provide support above 1295. To the upside, 1400/10 should keep the market capped for now.

Daily Coffee Market Outlook

NY- Buy (1)- NY managed to post a small gain of just over 1 cent amid very light volume and lack of any juicy fundamental data. Most of Wednesdays losses were erased as March headed back towards the stability zone of 146. Although some of the momentum has reduced, it appears as if the risk lies to the upside as market chatter revolves around the establisment of new longs coming to the fray. For the meantime then, with the dollar losing some of its initiative built from Fridays unemployment data, the market looks like it wants to go up and test December highs once more. We see the potential for a close above 146 today which opens the door to further gains towards 148.5 and 151. Only a dunk below 140/138 will shake out longs and open the possibility of a retest at 133 support.

Liffe- Buy (1)- Like NY, Ldn suffered from lack of volume with what appears to be the festive doldrums slowly taking hold. Jan managed to hold above 1360, further cementing its base above this level. With the dollar on the back foot, its next target will be to break the 1400-1410 barrier, but with light volume and lack of general interest, this may prove to be a bridge too far in the short term. Support then lies at 1360 and 1295 (crucial). To the upside, 1400-1410 followed by 1435 are your resistance levels.

Daily Coffee Market Outlook

NY- Buy (1)- Strength turned to weakness yesterday as March basis ranged between selling towards 147 and buying as it neared 140. As always, the dollar played its part but the session was characterised by the drift in prices and lacked any real momentum. Despite losses, March retains its upside bias and only a break below 138 should scupper that. Interestingly, there was an important comment by Martin Feldstein, a prominent analyst in todays FT. The dollar pessimist sees the shift away from the currency as simply a diversification in investment portfolios. Whoever follows this line of thinking should also understand that when the diversification is complete, the dolar will stop falling. Something to look out for in the medium to long term, with the greenback being so influencial with regards to ICE 'C'. As noted, todays support lies at 138, 135 and crucially, 133. To the upside, 146.5 remains a key supply point, followed by 148 and 151.

Liffe- Buy (1)- Having broken the upper boundary of the 1295-1370 consolidation zone at the beginning of the week, Jan failed to set the world on fire as flows remained reasonably light and expected fireworks to the upside didn't materialise. Instead, it looks like it is building somewhat of a base above 1360, poised for an attack of the key 1400-1410 area. It appears that this has been driven primarily by a combination of the greenback and spec longs in anticipation of the Vietnam new crop; with this in mind then, new crop estimates must be watched closely along with the continuing strength of the dollar. Disappointment of the former and continuation of the latter in combination could see the market dunk back towards the low 1300's as specs liquidate their longs. We see weak support at 1360 and key support at 1295; resistance resides at 1400-1410 then 1435.

Daily Coffee Market Outlook

NY- Buy (1)- Despite early losses as a result of Dollar strength yesterday, March was able to make a solid fightback as the Greenback went into reverse. Prompting the dollar decline was FED Chairman Bernanke who spoiled any hopes of an early tightening cycle by saying the US economy still faces 'formidable headwinds'. Traders gathered that he wasn't so entirely satisfied with the reduction in unemployment shown on Friday; indeed, 10% joblessness only looks good after having been at 10.2%, but if the figure remains here for any length of time the economy will still suffer the effects of human capital depreciation. As such, Bernanke re-stated his pledge to keep rates 'on-hold' for an extended period, which we presume to mean until he sees a sufficient decline in the unemployment rate.
With the Dollar resuming its downward trajectory, we see the potential for further gains in March and, having closed above 146.50, see the potential to challenge 148.50 resistance. To the downside, somewhat further down, nearest support resides at 141 and 138. In embarking on this bullish outlook, we note that following the strog 5 cent rally yesterday, there may be some early profit taking and consolidation.

Liffe- Buy (1)- Like NY, initial weakness in Ldn reversed to strength in tandem with the greenback as Jan closed on its highs at 1377. However, expected stops above 1370 did not materialise and the market was not able to stage a further rally towards 1400. Today, with the dollar on the back-foot, we see the potential of gains to 1400; however, throwing caution to the wind and without resistance at 1370 not decisively broken yesterday, we acknowledge the chance of Jan slipping into the boudaries of the previous months consolidation zone (again). A fresh assault at resistance lying at 1405-10 would give the market hope that the sideways range has been well and truly put behind us.

Daily Coffee Market Outlook

NY- Sell (1)- Fridays unemployment data drew a surprise to the upside with the dollar making (an uncharacteristic) fightback. Better data has correlated negatively with the dollar of late but this was turned onto its head Friday as a wave of short covering lifted values accross the board. Most likely, this can be explained in terms of a yield play; unemployment is a decisive factor in FED rate-setting policy, and Treasury traders sold as the market began to price in earlier than expected rate rises. As a result, ICE 'C' fell as the dollar rose and losses at settlement amounted to 3.30 cents in March. Today we see the possibilty of further losses albeit small ones as overnight dollar selling from the far east looks to influence once more. Crucially however in the medium term, as long as March can continue to hold above 138, we see potential to clear the 146.5 hurdle- but this will be highly dependent on dollar movements in the coming weeks. Support then lies at 138, 135.5 and crucially at 133. Resistance remains at 146.5, 148 and 151.

Liffe- Sell (1)- Like NY, LDN suffered from the dollar rally on Friday and dipped to wards the lower part of its congestion zone. The crucial 1295 support remainded intact however which prevented the 'prophesised' long covering and stop triggering down to the low 1200's. With the dollar looking weak in Asian trading overnight, we remain firmly fixed on that 1295 support level but more in hope rather than expectation as sideways consolidation looks set to continue through the holiday season and into early next year. As has been the case for some time now, resistance lies at 1370, support at 1295. We await further developments with baited breath.

Daily Coffee Market Outlook

NY- Neutral- Volume was light accross ICE 'C' yesterday as traders tried to glean any indication for the future state of the economy in Europe and globally as a whole during the ECB press conference. Trichet remained characteristically coy deflecting questions regarding present Euro strength and prospects for the dollar going into 2010, and very little action in the currency markets was a result. Today sees' further macro data as US unemployment figures are released for November. Opinion remains mixed amongst analysts as yesterdays calls for seasonal improvements met with bearish ponderings today in the press. With such uncertainty surrounding the outcome, and with the likelihood of traders sitting on the fence as they try to unravel the implications of the numbers, we too choose to remain neutral today. Support is noted at 138, followed by 135 and crucially, 133. To the upside, resistance is found at 146.5, 148 and 151.

Liffe- Neutral- Despite movements yesterday being driven by the Jan/Mar switch, LDN continues to operate within the tight range that the market has now become accustomed to. We expect volumes to remain light as with NY today as traders eagerly await US unemployment data. In such 'stale' circumstances, we refrain from startegy. Support remains at 1295 while resistance lies at 1370. With a bit of luck, Non-farm payroll data may surprise either way today and encourage traders to drive Jan either up or down; but i wouldn't wait with baited breath.

Daily Coffee Market Outlook

NY- Buy (1)- Having broken free of the 130's consolidation zone March NY has attracted a swathe of new longs as traders look for further gains in the contract. The fears arising from the Dubai World debt 'crisis' seem to have been put on the back burner as analysts look ahead to US Non-Farm Payrolls on Friday and equity markets resume their surge upwards. Some notable institutions are calling for a resounding improvemet in jobs lost in November as analysts look towards 'actual' rather than 'hopeful' economic growth. Looking to the present however, the ECB rate announcement and more crucially the following press conference may well offer a glimpse into a European stimulus 'exit strategy'; any hints that rates may begin to rise sooner rather than later could dampen any possible improvements in sentiment from the employment number tomorrow. We remain bullish NY and continue to eye gains to 146 then 148.50. Support lies at 138 and crucially, 133.

Liffe- Neutral- Without wanting to sound like a broken record Ldn continues its consolidation sideways and offers very little in the way of ideas to gauge its short to medium term intentions. As such we choose to retain our neutral stance and look to the ECB press conference and resulting dollar/equity market movements to give direction. Support remains at 1295 while rsistance looks to cap Jan at 1370.

Daily Coffee Market Outlook

NY- Buy (1)- NY yesterday continued the theme set on Monday as it closed up just under a cent. Having decisively broken free of the 133-141 consolidation zone, March is poised for further assaults on the 146 and 148.5 resistance zones. As such, we remain bullish in NY, noting support at 138. One must bear in mind however that Thursday entertains the ECB rate announcement and Friday Non-Farm Payrolls- a surprise on either occassion will have ramifications for the dollar and commodities as a whole.

Liffe- Neutral- Ldn was unable to follow the good work of the ICE 'c' contract and failed to mount any meaningful attack of the upper consolidation border at 1370; and this is despite the challenge and bounce from support at 1295. With such developments, we cannot be certain of Ldn's next move, and in essence, expect further consolidation between the seemingly never-ending 1295-1370 zone.

Daily Coffee Market Outlook

NY- Buy (2)- The fallout of last weeks Dubai World debt debacle appears to have been short-lived as markets recovered accross the globe and the dollar continued to decline. Interestingly, equity/commodity market recovery came on the back of 'assurances' from Abu Dhabi. However, on paper, these assurances look rather shaky and the desert state has not in fact guaranteed to back Dubai to the hilt (although analysts believe that it is unlikely to let Dubai 'go-under'). Alas, the Dubai government has also stated that it will not guarantee Dubai Worlds' debts either, leaving global investors in a puzzling situation. One might question what other skeletons lie in the closet of other nations if the once 'investment darling' can suffer such a setback. And how much money is left to bail them all out? The equity and commodity rally continues regardless. And so, we find ourselves in perhaps the same situation as we did 10-12 months ago, albeit the opposite way round- with the bulls in control and sentiment at a high, the effects of bad news are short lived and the recovery vigorous.
Despite our gloomy long term ponderings, we remain bullish NY for now- March has regained its' composure and blasted through resistance at 141. The next resistance target lies at 146.5; a close through here opens the way for attack of 148 first then more notably 151. To the downside, support is now at 138.5 and critically, at 133.

Liffe- Neutral- Following the Dubai issue, LDN managed to recover from its challenge of the 1295 support (briefly touching 1300) and rally back towards the middle of the current range in the 1340/50 area. Technically speaking, the rejection of the low hints at a challenge of the range top at 1370, but judging by recent (ranging) performance, this is unlikely. We refrain from strategy today, but were Jan to break throught the ceiling at 1370, this would set up an assault of 1410 and more crucially 1435. To the downside, strong support remains at 1295.