By IFCMarkets

Higher Brazil crop forecast bearish for coffee price

On the daily timeframe #C-COFFEE: D1 has breached below the 200-day moving average MA(200), which is declining. This is bearish.

We believe the bearish momentum will continue as the price breaches below the lower Donchian boundary at 103.4. A pending order to sell can be placed below that level. The stop loss can be placed above 107.4. After placing the order, the stop loss is to be moved every day to the next fractal high, following Parabolic signals. Thus, we are changing the expected profit/loss ratio to the breakeven point. If the price meets the stop loss level (107.4) without reaching the order (103.4), we recommend cancelling the order: the market has undergone internal changes which were not taken into account.

Coffee production in Brazil is forecast to reach new record this year. Will the coffee prices continue falling?

Coffee exporter Comexim reported Brazilian farmers are expected to produce a record coffee crop in 2020. Brazil is the world’s largest producer of coffee. Comexim estimates Brazil will produce 67.7 million 60-kg bags of coffee this year. The previous record crop was 64.5 million bags produced in 2018. Brazil’s harvest of new coffee crop starts around April or May. The company expects a global surplus in the 2020-21 crop of 3.5 million bags. Expectations of higher output by world’s top coffee producer is bearish for coffee.

Summary of technical analysis

Market Analysis provided by IFCMarkets