New York’s coffee futures (Arabica) continue their upward trend, reaching $355.44 yesterday—the highest level since 1977—and up 9% year-to-date. Currently hovering around the $350 mark, these contracts surged by approximately 70% last year.
The reasons behind this significant rise include several factors, most notably concerns about crops from major producers, especially Brazil and Vietnam—the world’s largest coffee-producing nations. Both countries have been severely impacted by climate change through heatwaves and droughts. Additionally, global supply chain issues are fueling concerns over slower supply rates, which could increase costs for both coffee producers and consumers.
From a technical perspective, indicators suggest the continuation of the upward trend in coffee futures for the following reasons:
- The alignment of 20-, 50-, and 200-day moving averages in an upward direction, with the 20-day average crossing above the 50-day average, and the 50-day average crossing above the 200-day average.
- A bullish crossover between the MACD indicator (blue line) and the signal line (orange line), supporting a positive outlook for coffee futures.
- The Relative Strength Index (RSI), currently at 72 points, is in the overbought zone, indicating positive momentum for coffee futures contracts.
- The Positive Directional Movement Index (DMI+) registers around 32 points, compared to the Negative Directional Movement Index (DMI-) at approximately 7 points. The wide gap between these indicators highlights strong buying pressure on coffee futures. Moreover, the Average Directional Index (ADX) stands at about 43 points, indicating the strength of this bullish trend.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice. All trading involves risk.
