Drought Concerns Push Coffee Higher

Coffee Futures---Coffee futures in the December contract settled last Friday in New York at 97.05 while currently trading at 102.80 up nearly 600 points for the trading week as prices are now at a 6 week high. Major concerns about drought developing in the country of Brazil which is the largest producer has pushed prices off of a 14-year low as I have been recommending a bullish position from around the 101 level and if you took that trade continue to place the stop loss under the contract low and 14-year low which was hit on August 20th at 93.40 as an exit strategy.

If the hot and dry weather conditions persist I would think prices could touch the contract high which was hit on July 5th at 119 as the volatility should start to increase as this commodity can have tremendous price swings on a daily basis.

Coffee prices are trading above their 20-day but slightly below their 100 day moving average as I think we're just in the beginning of a bullish trend as the 95 level held on multiple occasions as the chart structure was excellent at the time of the initiation.

Currently I also have a bullish recommendation in cotton and I'm looking at a bullish position in the cocoa market as commodity pries certainly look cheap especially compared to the stock market which is right near all-time highs once again so stay long.

TREND: HIGHER--MIXED

CHART STRUCTURE: SOLID

VOLATILITY: INCREASING

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