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.