Morning Comment from Altico Trading

Good Morning!! While outside markets and risk sentiment remain lukewarm at best, coffee is finally receiving some badly-needed support from bullish supply news. December coffee closed higher for the third session in a row yesterday as buying turned active on the move through uptrend channel resistance at 141.80 while the market also finished the day above its 50-day moving average. Brazil's largest co-op said that their growing areas in the state of Minas Gerais have been impacted by recent dry weather and frost, which could reduce next season's production in that state (which mainly produces Arabica coffee) by as much as 7 million bags. While a portion of that output reduction is due to the bi-annual Brazilian crop cycle (2017/18 is an "off" season), this sets the stage for tighter coffee supplies not only for Brazil but on a global basis as well. While still well below its recent highs, the Brazilian currency was able to gain ground early this week which in turn provided some carryover support to coffee prices. ICE exchange coffee stocks fell by 2,246 bags on Monday and are closing in on a new multi-year low, showing
    that global demand remains intact. Coffee prices may see some back and fill action over the next few sessions, but look now to have put in a nearterm low with Monday's sizable updraft. Near-term support for December coffee is at 143.00 while a 50% correction of the July 15th to August 17th break will leave 147.20 as the next key resistance level, followed by 149.65.