On May 6, 2015 active monthly July ICE coffee futures traded at $1.2915, which is the lowest level since March. Coffee futures had not traded below the $1.30 level before that since early February 2014. July coffee moved from highs of $2.32 per pound on October 13, 2014 to the recent lows, a decline of over 44% as rains in Brazil improved prospects for the coffee crop. Additionally, strength in the U.S. dollar versus the Brazilian real caused coffee to drop, as the world’s largest producer of coffee beans saw prices not decline as much in their local currency. Coffee is one of the most volatile commodities that trade. Quite often, daily ranges can exceed 10% of total value. Since the lows on May 6, coffee has rebounded a bit with relatively tame daily trading ranges.
A correction has found support
The action in coffee since the lows has taken the price of beans steadily higher.
The correction from recent lows has taken the price of active month July ICE coffee futures 7% higher. At the same time, open interest is stable, but a momentum indicator, the slow stochastic, has turned higher. The relative strength indicator is neutral at 57%. The decline in coffee seems to have found good support below the $1.30 level over recent sessions.