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Coffee: Weekly Forecast 7th January - 13th January

Coffee prices dropped lower last week in an incremental manner and went into this weekend at its low around the 182.60 price. When trading opens tomorrow the cash price is certain to see some early volatility as large players within the coffee market return from their long holiday vacations. The price of coffee was trading near a high of 193.10 on the 2nd of January, but this mark was not able to be sustained.

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    Light holiday trading volumes in coffee may have played a part in recent price action. Volatile results in the commodity are a frequent occurrence, but the lighter-than-normal conditions in the commodities market in the past couple of weeks certainly opened the door for speculative tests. Coffee was trading near a high of 204.00 on the 19th of December. The current price of coffee is testing values last seen on the 12th of December.

    Full Trading Volumes in the Coffee Market

    The track lower in coffee has potentially been sparked as seasonal growing sentiment has been affected by weather news from Brazil mentioning rain, meaning a better harvest is anticipated. However, the trading results from the last two weeks also have to be viewed suspiciously, because of the holiday trading volumes being light and the potential of slight price manipulations having taken place. The price of coffee has not been wildly volatile, but its lower trend has brought it to the lower elements of its one-month price range.

    As trading begins tomorrow traders should watch the opening of the coffee commodity. Last Friday’s trading opened with a gap lower and the inability to sustain a climb upwards might cause nervous trading to be demonstrated early on Monday. As the price of coffee hovers near early December prices a move lower to the 181.00 and 180.00 price levels could spark more bearish momentum. Full-volume trading this coming week is certain to show where market sentiment in coffee percolates.

    Coffee Near-Term Range Potential and Volatility

    Day traders participating in the coffee market need to understand the cash price of CFD trading can produce sudden volatility and risk management is always essential when wagering on the commodity. As full trading in coffee resumes early this week the results from the past two weeks will be tested quickly, support ratios are certainly easy to observe, but that doesn’t mean that coffee cannot trade lower. On the 5th of December, the price of coffee tested the 176.00 mark. Volatility as volumes increase in the coffee market early this week should be anticipated.

    • While talk about rainfall in Brazil may be heard early this week, the price range and speculative orders will likely dominate the price of coffee in the near term.
    • Support should certainly be watched near the 182.00 and 181.00 levels, if these levels falter early this week, this could mean additional bearish price action could develop momentarily.
    • Sustained support could boost bullish perspectives in coffee if these lower price levels prove durable in the short term.

    Coffee Weekly Outlook: 

    Speculative price range for Coffee is 177.20 to 193.60

    Having suffered a rather incremental selloff last week with light holiday trading dominating, early results in coffee should be monitored closely. Conservative traders – if there is such a thing among coffee traders – may want to watch the early action to gauge market sentiment. Monday and Tuesday may indicate the downward momentum that has been generated in the price of coffee the past couple of weeks, along with reversals higher on occasion.

    As always traders need to brace for swift price action in coffee, volatility is part of its fame in the commodity markets, and as large traders return from the holidays this week price action is certain to be rather fast. Traders who are looking for a return of higher prices cannot be blamed, but they should use solid risk-taking tactics, including entry price orders with stop loss and take profit targets established too.


    Robert Petrucci
    About Robert Petrucci
    Robert Petrucci has worked in the Forex, commodity, and financial profession since 1993. Important aspects of his work involve risk analysis and advisory services. As an advisor in a Family Office he maintains a conservative approach for wealth management and investments. Robert also works in private finance with investors and companies delivering financial and management services.

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