Wednesday’s Technical Analysis: US Coffee
US Coffee CFD closed higher Tuesday.
The high range close set the stage for a steady to higher open Wednesday.
Stochastics and the RSI are Bearish indicating that sideways to lower prices are possible near term.
Closes below the reaction low crossing will confirm that a short term top is in. If US Coffee renews the rally off of the Dec lows, the Dec high crossing is the next Northside target.
Coffee is the 2nd most commonly traded commodity in the world (measured by monetary volume), is 2nd only to Crude Oil as a source of foreign exchange to developing countries, according to the International Coffee Organization.
While production and consumption of many commodities tend to rise and fall based on price, shifts in Coffee supply and demand are not so prone to price changes as people look for their morning cup of Coffee at whatever the price is.
An important distinction for Coffee futures is that 2 different types of coffee are traded on the world’s exchanges.
US Coffee futures and options are traded in New York on the Intercontinental Exchange (ICE, formerly the New York Board of Trade).
- The size of the US Coffee “KC” futures contract is 37,500 lbs
- Coffee commodity trading is now done electronically.
- Coffee futures prices are quoted in cents per pound, and the minimum price fluctuation is 5/100 cent/pound, equivalent to $18.75 per contract.
- A 1-cent change in price equals $375.
- The coffee futures contract months are March, May, July, September and December.
- The contract prices physical delivery of exchange-grade green beans from one of 19 countries of origin in a licensed warehouse to one of several ports in the United States and Europe.
International Coffee Market
London Coffee futures are traded on the Euronext.liffe.
- The size of this Coffee futures contract is 10 metric tons.
- Coffee futures prices are quoted in USD’s per metric ton with the minimum price movement $1 per ton or $10 for the contract.
- Contract delivery months are January, March, May, July, September and November with 10 delivery months available for trading.
Other international exchanges that trade coffee futures include the Singapore Commodity Exchange (Robusta), the Commodities & Futures Exchange (BM&F) in Brazil (Arabica) and the Tokyo Grain Exchange (Arabica and Robusta)
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