Coffee Arabica Weekly: Sold Downturn Continues After Upwards Attempt Fails

More selling has been seen in Coffee Arabica and the price of the commodity going into this weekend was around $275.67. A low near the $272.00 vicinity was seen on Thursday and Friday’s low came within sight of the $272.50 mark. Now speculators need to decide if the these lower values represent durable support levels or if this is where the market is headed when additional sellers step into what may be perceived as significant bearish activity.

Strong supply is shadowing the Coffee Arabica market at this juncture. However, before everyone thinks a major surge downwards is simply going to remain intact other parameters exists which should serve as cautionary warnings. One of them is logistical problems that are arising for the commodity in the coming months, this as a major chokepoints in the Red Sea may cause navigational changes for shipments.

Lower Trend is Significant and is Testing Important Support

However, the lower price trend which has developed in force since late August when concerns and speculative buying peaked around $343.00 - clearly remains a force. A buying surge starting this past week’s trading action flirted with the $290.00 ratio on Monday but quickly ran out of power. The price differential in Coffee Arabica this week was less than $20.00 which does show some larger players believe the price of the commodity is within a comfortable equilibrium but also hinting at calm selling pressures in charge.

Coffee Arabica breaking below the $280.00 price on Wednesday and being able to sustain lower depths is a signal supply is strong in the mind of large players. Coffee Arabica is now within a price realm that it operated in late June, which was a value realm created after concerns about crops and harvesting started to take form and caused buying to develop starting in early June when a price of close to $240.00 was being speculated upon.

Lower Realms Speculatively Appealing But Technicals Are Not Simple

• Technically Coffee Arabica has shown an ability to certainly return to its lower realms in a logical manner after sentiment shifts and buying spurts caused the upwards momentum of June and July this year.

• The price of Coffee Arabica has returned to a lower realm it has touched since February and then produced plenty of movement.

• While charts are important from a technical perspective, the question about where sentiment will now allow Coffee Arabica to drift is important.

• Lower prices have certainly been seen in Coffee Arabica and the temptation is to believe values could fall further.

• The worries about shipping may influence the price of the commodity, but the influence could trigger responses that may feel contradictory.

• If for instance logistics are a concern this could send buyers elsewhere and potentially cause lower prices just as much as it could create upwards pressure as seller compete for market share.

Coffee Weekly Outlook:

Speculative price range for Coffee Arabica is $258.00 to $289.00

Retail traders have seen a solid downwards motion in Coffee Arabica develop. The price of the commodity from a historical perspective remains within inflated territory, but the current values of the marketplace are where large players are comfortable. The nearly $20.00 price differential between highs and lows this past week indicates that there isn’t a lot of speculative fuel creating velocity within Coffee Arabica and suggest the current realm may hold.

However, the trajectory lower may look appealing via sentiment to some who believes the $270.00 realm is the next important barrier. If broken below, Coffee Arabica could certainly tests lower depths, but day traders should not get overly ambitious. The lack of real velocity downwards, particularly after the failed push upwards early last week is a signal that sellers remain in control of the Coffee Arabica marketplace for the time being, but risk management is essential when trying to ride the trend.