The coffee price outlook continues to look promising for the bulls and an inflationary environment will just add to the upside potential. Cash markets in Central America are already in a steep uptrend and premiums remain historically rich in some cases. This tightness has translated to a sharp increase in demand for exchange warehouse stocks and with hefty cash premiums; demand for exchange stocks is likely to remain strong. The market saw solid gains on the session yesterday as most commodity markets found more active fund and speculative buyers. Traders seem to be accepting more risky investments as there is a general perception that the world economy has bottomed and that commodity markets may benefit. The weak US dollar and a surge in the stock market and in energy markets added to the positive tone. Declining exchange stocks and ideas that South America cash markets could remain tight into the summer helped to support. Costa Rica exports in March reached 202,199 bags (-7.8%) and reached 701,670 bags for the October to March time frame, down 4.6% from the previous year pace. Honduras exports for March were up from last year but the cumulative exports for the 2008/2009 season (Oct-March) are still down 11.2% from the previous year’s pace. The market is slightly overbought but the minor trend has turned back up and the market is building a nice base of support. Exchange stocks were down 10,746 bags to 3.978 million with 2,373 bags pending review. Stocks are down near 188,000 bags since early March.
TODAY’S MARKET IDEAS: July coffee support comes in at 118.60 and 117.85 with 123.40 as next upside target.