Morning Commentary from Altico Trading

    Good Morning!! The increasing prospect for a big upcoming Brazilian crop continues to drag coffee prices further to the downside. July coffee closed moderately lower yesterday and pushed down to the lowest level since May 3rd. Although stronger equities and a weaker Dollar provided some tangible benefit, a sizable pullback in the Brazilian currency weighed on coffee prices. A key Brazilian trade house pegged their coffee crop for the 2016/17 season at 56.4 million bags, up 12% from last year, which adds to a growing list of forecasts that have come in above the 54 million bag level in spite of problems in Brazil's Robusta-growing region of Espirito Santo. Vietnamese production looks to be heading towards a sizable decline for the 2016/17 season, but any bullish impact provided to the market may be muted if Vietnam's exports continue an upsurge that started earlier this year. The demand side of the equation remains mildly positive and was reinforced by news that ICE exchange coffee stocks fell by 2,209 bags on Monday and reached another new multi-year low. Near-term resistance for July coffee will be at 121.25 while close-in support and the next downside target is at 117.20.