A weaker tone to the outside markets plus a jump in the US Dollar have helped put pressure overnight, added to the introduction of widespread rains in the forecast reported earlier this week. The coffee market is in the process of correcting its overbought condition, and has now fallen more than 27.00 cents below last week's high for the move. With continued Brazilian supply uncertainty, corrective breaks are likely seen as buynig opportunities when the long liquidation runs out of steam. Although there is a general consensus in the market that Brazil's coffee production will fall by at least 10 MM bags this season, an extended pattern of significant rainfall could at least help limit the further losses in production. The short term technical action is weak at the moment, with the market in a long liquidation mode. Close in support comes in near the 180.85 and then the 174.00 areas, with resistance near the 189-190 levels.
by Alonso Tomas--Altico Trading