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.