Coffee commentary for March 9th

Good Morning!! The coffee market seems to have the longer-term fundamentals to move to a higher price level, but the currency situation in Brazil and aggressive selling from producers and exporters has helped to hold the trend down and encourage aggressive selling from speculators. The International Coffee Organization pegged world production for the 2014/15 season at a 3-year low of 142 million bags. World consumption for 2014 was thought to be near 149 million bags and is expected to grow by 2% this year. Colombia coffee production for February was 1.03 million bags, up 18% from last year. The market saw an impressive rally on Friday to recover a large portion of the recent losses, with May coffee finishing 485 points higher for the session. This left the market down just 60 points for the week. The rally for late last week was especially impressive given the surge higher in the US Dollar, collapsing gold prices and weakness in energy and equity markets. The Brazilian currency experienced a new low for the move on Friday. Trend-following funds shifted from a net long to a net short position of 6,710 contracts. A continued bearish weather forecast and currency weakness in Brazil are negative forces, but the market has rallied sharply in the past three sessions. Close-in support for May Coffee is at the 135.80 and 134.45 levels, with 143.80 as key resistance.