Daily Coffee Commentary - June 18, 2021

Arabica coffee futures reversed direction Friday to close higher helped by speculative short covering. The most  active contract for September delivery settled 35 points higher at 151.95 cents a pound. Prices were under  pressure early trading down 2.3 % or 2.45 cents to 149.15. The weak technical outlook encouraged the initial  spec selling. The respect of the lower band of the Bollinger, oversold conditions, and book squaring before the  weekend triggered the short covering when the selling eased. During the week, Arabica prices lost 7.65 cents  or 4.8 %. The market was affected by a general sell-off of the markets following the strengthened of the dollar  on FED news. The breach of the uptrend accelerated the speculative liquidation. Weather in Brazil was dry  
across the coffee belt, and temperatures fell to single digit but without any frost threat expected at least for  the next ten days. In Colombia, the protests have paused but it will take 3 to 4 months for the normal flows of  coffee shipments to ports. Premium for Colombian beans raised to 75 cents from 55 cents premium before  
the national strike, according with report from Reuters. Technical factors may discourage selling in the short  term, as prices are oversold (RSI 27.7%), and SSTK with a buy signal (SSTK 20 %/ 17%). Reduced commercial  selling after the July FND (June 22nd) will allow prices to soar more freely.  
 
The recent wave of non-commercial de-risking eased today, encouraging values in Robusta to mount a reversal  of yesterday’s losses to end the session 1% higher. Light follow- through pressure from the previous session  saw values open marginally lower and swiftly test below $1600 basis September. However, consistent roaster  scale down buying between $1600 and the previous low at $1594 slowed the early pace to the downside and  
prompted a reversal up to the intraday high at $1622 as fund and origin selling was noted more by absence. A  brief retest below $1600 was encountered through the mid-session tracking losses generated in Arabica, but  
the situation was unchanged as the market failed to attract a fresh selling element towards the lows whilst  further commercial support was uncovered sending values north into the closing bell. Technically the market is  running into key support resting at nearby averages and congestion at the psychological $1600, which is  slowing downside trend strength after encountering a week of negative macro influence.