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.