Robusta Coffee to Bounce Without Buy Signal: Technical Analysis

Robusta coffee futures are close to a support level that may indicate a temporary end to eight weeks of declines, according to technical analysis by Newedge Group analyst Veronique Lashinski.

The May robusta coffee futures contract has dropped 15 percent since the week ended Jan. 8 and yesterday prices closed at a record low $1,222 a metric ton for the 10-ton contract that started trading in January 2008. The drop followed last week’s 4.1 percent decline, the biggest weekly decrease since November.

“The sharp decline of the last six days has brought the May robusta futures to the proximity of support at $1,209- $1,219” a ton, Lashinski said by e-mail yesterday. “I’ll be looking for a corrective bounce in the coming days although there is no immediate buy signal.”

Prices have dropped 5.6 percent this year, on top of a 16 percent decline last year as Vietnam, the world’s largest grower of robusta beans, built up record stockpiles, according to the U.S. Department of Agriculture. So-called certified stockpiles in warehouses monitored by the Liffe exchange in London have more than doubled in the past year.

In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.

Tags: Vietnam Coffee, vietnam coffee exports, Vietnam Robusta Coffee