Coffee Prices Just Hit 2-Month Highs. How Much Higher Can They Go Here?

December coffee futures (KCZ25) present a buying opportunity on more price strength.

See on the daily bar chart for December arabica coffee futures that prices have rallied from the July low, have just hit a two-month high and prices are trending higher. See, too, at the bottom of the chart that the moving average convergence divergence (MACD) indicator is in a bullish posture as the red MACD line is above the blue trigger line and both lines are trending higher.

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Fundamentally, less-than-ideal growing weather in major coffee-producing countries has crimped supplies. Brazil and Vietnam have seen major droughts that have severely impacted crop yields. Meantime, world demand for coffee continues to rise steadily, especially in China. Supply chain disruptions have also limited coffee supplies on the world market in recent years.

A move in December coffee futures above chart resistance at today’s high of 344.70 cents would become a buying opportunity. The upside price objective would be 405.00 cents, or above. Technical support, for which to place a protective sell stop just below, is located at 320.00 cents.www.barchart.com

IMPORTANT NOTE: I am not a futures broker and do not manage any trading accounts other than my own personal account. It is my goal to point out to you potential trading opportunities. However, it is up to you to: (1) decide when and if you want to initiate any trades and (2) determine the size of any trades you may initiate. Any trades I discuss are hypothetical in nature.

Here is what the Commodity Futures Trading Commission (CFTC) has said about futures trading (and I agree 100%):

Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.

On the date of publication, Jim Wyckoff did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com

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