Daily Coffee Market Outlook

NY- Sell (1)- Stormy seas of late in NY were becalmed somewhat yesterday as ICE 'C' managed to close small up for the day. However, we see this as little more than restbite pending further losses. The macro picture worsened somewhat Tuesday as German consumer confidence dipped, followed by the US consumer confidence measure which continued the trend. EU periphery fears continue to weigh on the market, and the momentum remains firmly to the downside as traders await the next leg lower. We look for a challenge in the short term of support at 128.50 and further, 123. To the upside, 135 should keep a lid on things.

Liffe- Sell (1)- May teeters 'on the brink' in LDN as it seems the whole of the spec community has been jumping onto the current downtrend and daily weakness with all guns blazing. Looking at the open interest and listening to market commentators, the system short position is now at one of its highest levels this year and this looks unlikely to change in the short term as macro developments weigh on the market. Although LDN took a breather yesterday from Mondays slide, we see the prospect of more weakness today, especially should May close below 1250. To the upside, we need a close above 1280 to give longs any form of hope and before shorts start to think about liquidating.

Daily Coffee Market Outlook

NY- Sell (3)- Inevitably, currency movements were the main driver of the 'C' and commodity markets in general. USD strength in the morning led to a lower 'C', followed by afternoon weakness in the USD culminating in a higher NY. The pattern looks set to continue today in terms of currency 'domination', albeit to the upside in the dollar and downside in NY. This follows last nights decision by the Fed to increase the overnight deposit rate by 0.25% to 0.75%, sending an explicit signal to the market that the emergency supply of liquidity to the markets is done and the aggressive monetary easing cycle looks set to reverse. Historically, the discount rate has been used as a psychological tool in sending signals to the market of future monetary policy direction; and it was something the market has been warned about recently by Bernanke but the shock was in the timing- sooner rather than later. Inevitably, the greenback reacted positively against the main basket of currencies sending the EUR/USD to recent lows. In light of this, we see the only way as down for NY today and remain bearish. Levels to watch on the downside are 130, 128.5 and 123. To the upside, 135 looks to be strong resistance in March.

Liffe- Sell (1)- More of the same for LDN as the USD coordinated proceedings Flow was rather limited in the outrights with most volume arising from the switch. Sentiment appears to be to the downside still as even USD weakness into the afternoon couldnt lift the board much higher than unchanged and origin sellers remained like a cloud over LDN. Following the cut in the discount rate, we retain our bearish stance and see more weakness resulting in the short term. Levels to watch remain 1280, 1300 and 1315 to the upside. Support lies at 1250.

Daily Coffee Market Outlook

NY- Sell (1)- The USD was the main driver of proceedings yesterday and this does not look set to change today. A woeful day for Europe Wednesday as the UK unemployment disappointed, and further details emerged in Greece regarding a certain investment bank helping massaging its deficit and mislead investors. The latter sent the cat amongst the pigeons once more, further damaging confidence in the Euro and evoking angry reactions from EU members, particularly Germany. It seems at the moment, the EU wants to show that it is behind the peripheral countries without having to put its money where its mouth is. Something must come to a head sooner or later. Euro weakness was excaserbated further as US housing data surprised to the upside and the FOMC minutes revealed the Fed was debating how to unwind some of its housing stimulus measures. Ice 'C' didnt react quite as negatively as might be thought, but the fact that these problems have been around for a few weeks now is watering down their impact. That is not to say however that it is not having an impact at all; last weeks up-swing has been reversed its seems and the possibility of March creeping above the 135 stability point unlikely. We look down then towards support at 128.50 and envisage a challenge here once more in the short-term. Pending a close below there, 123 becomes the next downside target.

Liffe- Sell (1)- Like NY, Ldn is dominated by the dollar (again) and macro developments in the EU. The switch appears to be where the majority of volume is centred, although it seems that some of the Mar/May strength is beginning to wane; possibly due to system funds having finished the majority of rolls needed to be done. We look for further weakness today accross the board and set our sights in March now towards 1250 following the close below 1280. 1300 should provide some sort of a cap to the upside should the USD weaken.

Daily Coffee Market Outlook

NY- Neutral- The Euro rallied from 9 month lows yesterday as the EU spelled out a tougher stance to Greece with regards to its budget deficit and efforts towards reducing it. Bond holders fears were quelled somewhat reducing the spread between Greek and German government issues thus propelling the market and commodities upwards. NY didnt react quite as positively as the holiday hangover weighed on volume on both sides of the pond, with March closing up three quarters of a cent. This morning, global equities opened higher as the earnings season continued and better than expected results were posted. In light of this, we see the possibility of further EUR strength and USD weakness. However, following yesterdays underperformance in the 'C', fireworks are unlikely. The 135 level is becoming more and more important as supply caps any notable gains and keeps sentiment relatively bearish. With lack of decent volume, we retain our neutral stance; the majority of volume is likely to be made up of rolling down the board as first notice day approaches on Thursday. Levels to watch out for on the upside are 135 and 137.5. Resistance lies at 130, 128.50 and 123.

Liffe- Sell (1)- Ldn couldnt capitalise on gains made accross the commodity spectrum yesterday with March settling at unchanged. Spread activity dominated proceedings as Mar/May firmed even more to around the -30 level. This could well continue looking forward and some traders are looking for gains around the -25 level with rumours of a large fund long looking to roll around 4000 lots in the next week or so. In the outrights, 1280 remains a relatively key level in March and should provide the basis for another leg lower should the contract settle below. 1250 would be the next level of support if the 1280 level was to go. On the upside, with supply mounting, resistance lies at 1310 and 1350.

Daily Coffee Market Outlook

NY- Neutral- Following yesterdays market holiday, NY finds itself firmly in the middle of what looks to be sideways consolidation. For now, the upper boundary appears at 135, while the support lies at 128.50. With the market almost completely driven by the USD at present, we choose to remain neutral pending tomorrow evenings FOMC meeting minutes. This should provide us with some sort of dollar direction as market participants get to grips with the future Fed rate outlook. Were the consolidation zone to be breached to the upside, 137 is your next supply point. To the downside, below 128.5, 123 is the next important support level.

Liffe- Sell (2)- LDN suffered a further slide yesterday on light volume amid the US holiday. The switch provided the main turnover as players continue rolling into May as first notice day in March approaches. Tet in Vietnam is now in full swing, and despite the US back to business, volumes should remain light. Although it is unwise to draw conclusions on days such as yesterday, the downside pace is certainly accelerating, and a close in March below 1280 should increase the pace as such; 1250 then becomes the next target. To the upside, March would need a clear break of 1350 to turn the current direction on its head, but in the current climate, this looks unlikely.

Daily Coffee Market Outlook

NY- Sell (1)- Yesterdays meeting of EU leaders regarding Greek fiscal woes lifted the market initially in the hope that a solution would be thrashed out. However, as is often the case with these things, the accord that was reached disappointed (buy the rumour, sell the fact), and the Euro subsequently faltered. Statements by European leaders left open how the EU will respond to a fresh wave of speculative attacks against Greece or countries such as Spain and Portugal, which are also struggling to cut budget deficits. Despite the dollar gaining strength into the afternoon, the 'C' regained its composure closing a little under unchanged. As the market drifts sideways (halting the recent slide), one must wonder which direction it will take next. In all likelihood, with NY closed on Monday for Presidents day, we see the prospect of some profit taking (albeit cutting losses on the recent highs) and a resulting slide. It is unlikely many traders will want to be left holding long positions over the extended weekend. The switch should dominate proceedings once more, and this is where the action will be, as specs jump on board the firming spread. Resistance can be found today at 135; to the downside, your supports are 130, 128 and 123.

Liffe- Sell (1)- Unlike NY, LDN managed to finish slightly higher yesterday but the move on the back of positive global macro sentiment lacked any real volume and conviction. The range in March remained tight, and held steadily between first resistance at 1315 and support at 1290. Although, with a stronger dollar and question marks over the Greek bailout plan, selling today is unlikely to be spectacular and mostly driven by the switch. We see LDN lower overall, and with this in mind, look for a convincing close below 1290 in order to resume the downward momentum. To the upside as mentioned before, 1315 followed by 1350 are your supply points- the former gaining in importance as the market consitently fails to make a solid break above.

Daily Coffee Market Outlook

NY- Buy (1)- Volumes were well below average yesterday. Mar/May were predominantly driven by the switch as we edge closer to first notice day; and it was the switch on light volume that pushed the market up to close nearly two cents in positive territory. Overnight, the global macro picture improved as Australian unemployment fell, European leaders meet to thrash out an aid package for Greece and Chinese inflation unexpectedly slowed. Latterly, the Chinese number is good news, as it suggests that inflation in China is not getting out of hand. As such, we shouldn't see aggressive tightening in credit conditions in China, allowing the global recovery to continue. What this all should translate to in the short term is some further relief accross commodities as a whole, global equities and a weaker dollar. As such, we see potential for further gains in NY today, dependent of course on a weaker USD and no negative macro surprises emerging from the woodwork. Resistance remains stubborn in the front month at the 132.50 zone, followed by 135.50. To the downside, support remains firm at 128, while 123 is the next level some way down.

Liffe- Neutral/Buy (1)- We were surprised somewhat by Ldn yesterday, which greatly underperformed NY's positive clawback. Most likely, this can be attributed to very low volume, the majority of which was made up of AA's and the switch. Specs appeared to be noticeably absent from proceedings, thus rendering global macro developments relatively impotent. As a consequence, we choose to remain neutral today despite positive developments appearing overnight. However, that being said, the risk today is most likely to the upside, but this is dependent upon volume and general interest. Resistance lies at 1315 followed by the stability point at 1350. To the downside, 1290 followed by 1250 are your support levels.

Daily Coffee Market Outlook

NY- Neutral- The commodity markets' main driver, the USD eased yesterday, and as a consequence, should have offered a little restbite from the prevailing downtrend. However, rather unexpectedly, NY struggled to capitalise, and any move into positive territory lacked real conviction and noticeable volume. This morning, stocks rallied worldwide as the prospect of German aid for Greece reassured investors that perhaps there is indeed light at the end of the tunnel; the German finance minister hinted that aid may extend beyond guaranteeing loans, positive in that it is the first real indication that Greece will not be left to fend for itself amid the crisis. Had this comment come over the weekend, we would certainly see it as bullish for the 'C'. However, following yesterdays lack of followthrough to the upside on the weaker dollar, we choose a neutral stance in NY today. To the upside, resistance remains at 132.5 and 135. Support for today lies at 128 and 123. 130 is likely to play its part as options expire today (Wednesday).

Liffe- Buy (1)- London closed more positively than NY following yesterdays USD retreat but its performance was noting extraordinary as volumes remained light. Most likely, the majority of volume came from spec flow as roasters and origin kept to the sidelines. With Tet approaching in Vietnam and the futures price at such low levels, we see this trend continuing for origin players in the short term. Following the German finance Ministers' commitment to aid Greece in a 'bailout' of some form, and yesterdays outperformance of NY, we see the prospect of further gains (albeit small ones) in Ldn. Dependent on the USD, gains could extend to first resistance in March of 1315, followed by 1330. On the downside, support remains at 1250 with 1300 the key trigger.

Daily Coffee Market Outlook

NY- Sell (1)- Yesterday saw somewhat of a relief rally in NY and commodities in general as a weakened dollar lifted the board following mutterings about the EU periphery; and plans to halt a slide into further ratings downgrades. This seemed to encourage traders who collectively breathed a sigh of relief following the recent downtrend. Most likely, specs looking for a correction joined the party helping to lift the board yet further as the greenback slid. In terms of the 'C', the trend is still pointing downwards and technically speaking, March needs a strong correction above 138 if it is to set Northwards in earnest once more. We see the possibility of yesterday being 'a dead cat bounce' and remain bearish, albeit less confidently. The dollar is driving the market still and as such any further coffee weakness will be explained in terms of dollar strength. To the upside, March should remain capped below 132.5 and 135. Support lies at 128 and 123.

Liffe- Sell (2)- LDN weakness was the theme for Monday morning as robusta did not react positively to dollar weakness on the opening. The trend is firmly downwards on Liffe and this would go some way to explaining the fact that March scraped back to barely unchanged in the afternoon despite a promising performance accross the pond in the 'C'. Traders appear to be un-swayed by greenback 'noise' and clearly see further losses in the short-term. With this in mind, we remain bearish, but, like in NY, the dollar will have its' say. Support lies at 1250, the bears next target. To the upside, 1315 and 1330 should slow down any potential advance.

Daily Coffee Market Outlook

NY- Sell (3)- With the market being driven from macro trends rather than coffee fundamentals, Friday saw losses once more as a result of greenback strength. The commodity complex as a whole is suffering from this recent upside trend in the dollar and for the time being, this looks likely to continue. Jobs data was mixed and cancelled each other out; non-farm weakness came in combination with an improvement in the US unemployment rate. EU periphery woes continues to be reported in the press in the weekend and this is likely to be at the forefront of traders minds today. In terms of Euro weakness then and potential dollar strength, we see the prospect of further losses in the 'C'. To the downside, support lies at 128, 126.5 and then 123. To the upside, 130 followed by 132 should provide an upside cap.

Liffe- Sell (3)- Losses continued Friday as specs probed for stops below 1300. The dollar momentum appears firmly set and, as in NY, we see Liffe under pressure once again. March closed on 1295, important support, and in the absence of any positive fundamentals, the contract is unlikely to breach 1295/1300 today. To the downside, 1250 is the next talked about support level.

Daily Coffee Market Outlook

NY- Sell (1)- Following the dollar has been the order of the day of late and (rather boringly), it was the greenback that set the tone yesterday as March 'C' was unable to make any sustainable gains, settling down 2 cents for the session.We see the prospect for more of the same today as macro developments lead the global markets; as Greece teeters on the brink of bankruptcy, its future in the hands of the ECB or further, the IMF, the European community holds its breath. Yesterdays apparent acceptance by the European Commission of Greeces pledge to lower its budget deficit to under 3% by 2012 lifted the Euro- we will need more follow-through today and dollar weakness on the whole to lift the commodity complex significantly. Resistance lies at 133 and 135; with the trend firmly set downwards, a breach of both levels is needed to ensure a break of 130 and resulting freefall is not realised. We remain bearish unless there is a close above the former. Below 130, next resistance lies at 128 then 123.50.

Liffe- Sell (1)- The board has lacked volume of late and yesterday was no exception as the majority of spot month activity was driven by the switch. March now finds itself reasonably settled in the low-mid 1300 range, and without meaningful involvement from market players, this trend looks set to continue in the short term. The lower end of the range appears to be demand arriving at the 1315 level, resistance and healthy supply coming in at around 1350. What LDN needs it seems is some large movement in the greenback or important macro developments to rekindle spec and fund interest; developments that are not forthcoming at the moment. Amid the circumstances, we choose to remain bearish, if anything following the January trend. Resistance appears at 1350 followed by 1400 1380 0and 1400/1425 (key). To the downside, 1315 and 1295 (key) are support.