Coffee Futures—The soft commodity sector continues it’s bullish momentum as this is the place to be in my opinion as coffee in the March contract is up another 425 points at 123.75 a pound as prices are trading higher for the 3rd consecutive session hitting a 2 month high.
Fundamentally speaking prices this week have rallied sharply on concerns about coffee crop damage as Hurricane Iota on Monday slammed into Central America as a Category 5 hurricane, the strongest this season. Very heavy rain from the storm is expected to damage coffee crops. The same region is just recovering from Hurricane Eta two weeks ago that devastated Central America with floods and landslides.
Coffee prices are trading above their 20 and 100 day moving average as this trend has certainly turned to the upside as I also have bullish recommendations in orange juice and sugar which continue to climb higher as I see no reason to be short this sector as there is significant room to run in my opinion. The next major level of resistance stands all the way at the contract high at the 135 area as the volatility certainly is starting to expand to the upside as that level could be touched in the next couple of days so stay long as I think we’re onto something.
TREND:HIGHER
CHART STRUCTURE: IMPROVING
VOLATILITY: INCREASING
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