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DJ Technical Trader Special: Bears Decimate ICE Coffee Market

Other Topics: Coffee Charity Promotion, Coffee Trade Documentary, Coffee Production

March 20, 2008

Chicago, IL -- ICE Futures US May coffee futures have collapsed sharply in recent weeks as the bears have decimated and destroyed the recent bull run in the coffee market. ICE May coffee continues spiraling lower Thursday, as the price hit the lowest level since November 2007 in early trading.

ICE May coffee last traded down 545 points at $1.2750.

May coffee has tumbled precipitously from the $1.7190 high scored on Feb. 29.

The bull trend was destroyed and price has dropped back below major long-term support levels from the monthly chart.

However, the sell-off in coffee needs to be taken in perspective, as commodities across the board have collapsed in recent days.

"It's basically sector-driven," said Dan Vaught, futures analyst at Wachovia Securities. "We are hearing some talk funds are being squeezed on the liquidity side so they have to sell."

From a technical perspective, coffee has pushed below the key 200-day moving average this week. "Breaking through that moving average and falling below $1.3000 was pretty negative," noted Vaught.

"From a purely technical perspective I'm not seeing much support for coffee," he added.

However, Vaught did highlight the $1.2600 and $1.1800 levels as nearby support zones for the market.

He advised traders to monitor the crude oil market as that commodity's action could lead action across the complex.

Nonetheless, Vaught cautioned would-be coffee traders: "I don't have a whole lot of good things to say. Even if we do start coming back on the heels of a crude oil reversal, given the sheer size of the breakdown, it will be hard to sustain rallies (in coffee)," he concluded.

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