ICE Coffee Bulls Target Test of Range Top -- Technical Analysis

Kira Brecht

  ICE December coffee is trading sharply higher Tuesday, holding gains above the 20-day moving

average for the second session in a row. The market is bouncing from the bottom of a two-month

sideways trading band. Daily momentum is pointing higher and the bulls are targeting a move back

toward the August and September highs in the $2.1110-to-$2.0995 area.

ICE December coffee recently traded up 435 points at $1.9560.

  Since early August, ICE December coffee has traded in a choppy, neutral trading band defined by

the Aug. 1 high at $2.1110 and the Sept. 2 high at $2.0995 on the upside. On the downside, the lower

region of the trading range is seen at the Aug. 20 low at $1.8285, and then the Sept. 19 low at

$1.7640.

  The mid-September push below $1.8000 was short-lived and used as a buying opportunity. The

recovery from the lower end of the trading range targets a recovery rally back toward the range top.

An initial bullish objective lies at the upper daily Bollinger Band line at $2.0248.

  Looking at momentum indicators, the 14-day relative strength index is rising and supports a

near-term bullish outlook. The RSI climbed to 54% on Tuesday, from a recent low at 38% on Sept. 19.

  The December coffee contract is now trading above the 20-day moving average at $1.8787, and that

zone becomes support for the market. The bulls need to sustain strength above the 20-day moving

average in the short term to keep the bullish objective at the range top in play.

  Declines back under the 20-day moving average, if they were to occur, would be a weak signal and

would show the bulls are losing control.

  Shifting out to the monthly continuation chart for ICE coffee, the picture reveals a strong rally

move to start 2014. Both January and February registered strong gains in coffee prices. Since then,

however, a very large multi-month range has developed between $2.1570 and $1.5780. Those remain the

key long-term resistance and support zones to monitor. It would take a rally through the $2.1570

ceiling seen on the monthly continuation chart from April 2014 in order to unleash a continuation

rally move to the upswing seen in January and February.

  Bottom line? Watch action around the range top on the daily December chart at $2.1110. It would

take a strong breakout above that zone in the days or weeks ahead to suggest the market had

completed its current sideways, consolidation phase, and to open the door to a more significant

rally move.

ICE Coffee Bulls Target Test of Range Top -- Technical Analysis

Kira Brecht

  ICE December coffee is trading sharply higher Tuesday, holding gains above the 20-day moving

average for the second session in a row. The market is bouncing from the bottom of a two-month

sideways trading band. Daily momentum is pointing higher and the bulls are targeting a move back

toward the August and September highs in the $2.1110-to-$2.0995 area.

ICE December coffee recently traded up 435 points at $1.9560.

  Since early August, ICE December coffee has traded in a choppy, neutral trading band defined by

the Aug. 1 high at $2.1110 and the Sept. 2 high at $2.0995 on the upside. On the downside, the lower

region of the trading range is seen at the Aug. 20 low at $1.8285, and then the Sept. 19 low at

$1.7640.

  The mid-September push below $1.8000 was short-lived and used as a buying opportunity. The

recovery from the lower end of the trading range targets a recovery rally back toward the range top.

An initial bullish objective lies at the upper daily Bollinger Band line at $2.0248.

  Looking at momentum indicators, the 14-day relative strength index is rising and supports a

near-term bullish outlook. The RSI climbed to 54% on Tuesday, from a recent low at 38% on Sept. 19.

  The December coffee contract is now trading above the 20-day moving average at $1.8787, and that

zone becomes support for the market. The bulls need to sustain strength above the 20-day moving

average in the short term to keep the bullish objective at the range top in play.

  Declines back under the 20-day moving average, if they were to occur, would be a weak signal and

would show the bulls are losing control.

  Shifting out to the monthly continuation chart for ICE coffee, the picture reveals a strong rally

move to start 2014. Both January and February registered strong gains in coffee prices. Since then,

however, a very large multi-month range has developed between $2.1570 and $1.5780. Those remain the

key long-term resistance and support zones to monitor. It would take a rally through the $2.1570

ceiling seen on the monthly continuation chart from April 2014 in order to unleash a continuation

rally move to the upswing seen in January and February.

  Bottom line? Watch action around the range top on the daily December chart at $2.1110. It would

take a strong breakout above that zone in the days or weeks ahead to suggest the market had

completed its current sideways, consolidation phase, and to open the door to a more significant

rally move.

Brazil ’15 Coffee Crop Will Be Below 40m Bags, Ganes-Chase Says

By Marvin G. Perez

Sept. 30 (Bloomberg) -- “Every week that passes without enough rain is going to make the situation worse,” Judy Ganes-Chase, president of J. Ganes Consulting in Panama City, Panama, said yday in telephone interview Forecast compares with projection of 49.5m bags this yr by USDA, which “‘was probably overestimated’’ by as much as 3m bags ‘‘Coming into this season, potential was already low, from 43m to 44m bags, hurt by high pruning, lack of vegetative growth and lack of fertilizer” NOTE: Brazil is world’s top grower and producer; bag weighs 60 kgs, or 132 lbs NOTE: Through yday, arabica futures in N.Y. surged 73% this year after 1Q drought damaged crops Slumping Brazilian real helps cap coffee rally, she says Low prices in previous three yrs prompted growers to use less fertilizer, and dryness causes roots to separate from cracked soil, preventing plants from absorbing nutrients, Ganes-Chase says As spring begins in South Hemisphere, higher temperatures are evaporating moisture faster NOTE: Crop seen getting little relief from dryness, World Weather Inc. said yday NOTE: Reservoir levels in southeast, where bulk of crops are grown, were 25.7% of capacity on Sept. 28, compared with 30.3% at end-Aug., according to data from power-grid operator ONS

Brazil ’15 Coffee Crop Will Be Below 40m Bags, Ganes-Chase Says

By Marvin G. Perez

Sept. 30 (Bloomberg) -- “Every week that passes without enough rain is going to make the situation worse,” Judy Ganes-Chase, president of J. Ganes Consulting in Panama City, Panama, said yday in telephone interview Forecast compares with projection of 49.5m bags this yr by USDA, which “‘was probably overestimated’’ by as much as 3m bags ‘‘Coming into this season, potential was already low, from 43m to 44m bags, hurt by high pruning, lack of vegetative growth and lack of fertilizer” NOTE: Brazil is world’s top grower and producer; bag weighs 60 kgs, or 132 lbs NOTE: Through yday, arabica futures in N.Y. surged 73% this year after 1Q drought damaged crops Slumping Brazilian real helps cap coffee rally, she says Low prices in previous three yrs prompted growers to use less fertilizer, and dryness causes roots to separate from cracked soil, preventing plants from absorbing nutrients, Ganes-Chase says As spring begins in South Hemisphere, higher temperatures are evaporating moisture faster NOTE: Crop seen getting little relief from dryness, World Weather Inc. said yday NOTE: Reservoir levels in southeast, where bulk of crops are grown, were 25.7% of capacity on Sept. 28, compared with 30.3% at end-Aug., according to data from power-grid operator ONS

Outubro chega e chuvas são aguardadas, por Rodrigo Costa

O envio de um projeto de lei na Rússia para que a corte do país autorize o confisco de ativos estrangeiros provocou agitação e queda forte das bolsas, forçando o fechamento negativo na semana da maioria dos índices mundiais.

As operações de ataque ao IS (sigla em inglês do Estado Islâmico) coordenadas pelos Estados Unidos com o apoio de algumas nações árabes, França e parcialmente do Reino Unido contribuíram para que os investidores realocassem recursos para o dólar, fazendo a moeda americana atingir o mais alto patamar desde julho de 2010.

As commodities tiveram comportamento misto, com o açúcar subindo quase 10% em cinco dias, seguido pelas matérias-primas energéticas, e o café no meio também recuperando. Grãos e metais industriais sentiram mais o efeito da firmeza do dólar e cederam desde sexta-feira, dia 19 de setembro.

O movimento do arábica em Nova Iorque foi volátil com intervalos de negociação de mais de US$ 8.00 centavos nas três últimas sessões, tendo como fatores positivos não ter rompido a mínima da semana anterior, US$ 176.40, e encerrado a apenas US$ 3.75 da máxima (189.40) – o que não é muito dadas as condições recentes.

Londres oscilou menos e por ora tem conseguido ficar no meio dos 1900 dólares por tonelada apesar da proximidade da colheita no Vietnã, que não parece que trará uma pressão vendedora muito grande a princípio.

Fundamentalmente a novidade foi a primeira divulgação de uma estimativa de safra brasileira para 15/16, iniciada pela F.O.Licht. O número da consultoria alemã é de 43 milhões de sacas, ou 3 milhões de sacas a menos do que as 46 milhões do ciclo corrente. A produção mundial para 14/15 é estimada em 145.5 milhões de sacas, abaixo das 152.9 milhões de 13/14. A entidade diz que caso as perdas no Brasil sejam maiores os preços podem ultrapassar o pico de 1997, que foi de US$ 318.00 centavos. Outro dado interessante do relatório foi refrescar nossa memória que a última vez que houve dois anos consecutivos de produções decrescentes foi em 93/94, quando o mundo produzia 91.4 milhões de sacas – com o Brasil produzindo 27.2 milhões de sacas, e o Vietnã 3 milhões de sacas.

O mercado físico girou um pouco nas origens, principalmente na Colômbia que está na boca da safra, e os diferenciais não alteraram muito para o mercado FOB e spot, que continua vendo uma indústria abastecida e sem pressa de ir às compras.

O fim do mês de setembro fará com que a atenção dos participantes fique ainda mais focada nos mapas meteorológicos e no volume de precipitações, pois a temporada das chuvas não pode atrasar. As chuvas também precisam ser regulares para não causar maiores perdas nas lavouras que sofreram com a seca no começo do ano e com chuvas abaixo da média durante os últimos meses.

Os fundos reduziram ainda mais sua posição comprada, dentro do que esperávamos, e os comerciais estão com o dedo no gatilho para aumentar suas coberturas, seja em eventuais novas baixas, ou inevitavelmente a qualquer preço que eventualmente os futuros se encontrem tão logo os livros voltem a ficar mais “magros” – na últimas duas semanas houve um aumento do long destes participantes.

Tecnicamente os fundos devem voltar a comprar o mercado acima de US$ 190 centavos por libra. O real brasileiro desvalorizando faz com que os US$ 219.00 por libra sejam equivalentes a US$ 207.10 centavos por libra, com a moeda negociando a 2.45. Por ora não parece que isto deva alterar muito o comportamento dos produtores, que vão esperar a florada e a fixação das flores para voltar com mais apetite ao mercado.

Uma boa semana e muito bons negócios a todos.
Rodrigo Costa*

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Louis Dreyfus Boosts Profit, Helped by Large Harvests

DJones - Jacob Bunge And Leslie Josephs

     Agricultural trading firm Louis Dreyfus Commodities BV on Monday reported a slight increase in

earnings in the first half of 2014 as revenue rose 16% after large grain harvests.

     Louis Dreyfus said its sales volumes for crops and other products climbed 6% over the

year-earlier period, as the company expanded its shipping network for grains, oilseeds, coffee and

other crops.

     Net income rose to $260 million from $258 million, as revenue jumped to $33.7 billion from

$29.2 billion. The Netherlands-based company, founded in 1851, ranks among the world's largest

traders and processors of agricultural commodities.

     Louis Dreyfus and other major commodity trading houses are riding a boom in global crop

production that has replenished global stockpiles and provided processors cheaper supplies to turn

into food and other products. Driven by favorable weather, record-setting grain harvests are

expected in the U.S. and Europe this year, the International Grains Council said in a report last

week.

     "Price and volatility levels have been affected by substantial inventories for most of the

platforms and fast-growing supply," said Claude Ehlinger, interim chief executive and chief

financial officer for Louis Dreyfus.

     A surge in coffee prices, due to dry conditions in Brazil, provided opportunities for Louis

Dreyfus traders to capture profits in that market, while abundant corn improved margins for ethanol

operations. The company reported a $25 million impairment charge for an orange-processing plant in

Florida, which Louis Dreyfus said will process significantly lower volumes starting next year, as

farmers there have grappled with a bacterial disease that has crippled the state's orange groves.

     The rebound comes after Louis Dreyfus blamed lingering effects from a severe U.S. drought in

2012 for contributing to a sharp drop in 2013 earnings, which fell about 27% to $640 million last

year. Over the first six months of 2014, gross margins improved about 12%, the company said Monday.

     Louis Dreyfus has begun an effort to double revenues over the next four years alongside $4

billion in planned investments. But the company still is searching for a chief executive after Ciro

Echesortu, who led the firm for about a year, stepped down from the role in June.