Robusta Coffee May Drop to $1,515 a Ton, Sucden Says: Technical Analysis
Robusta coffee, down 12 percent this month in London trading, may fall a further 5 percent to $1,515 a metric ton, according to technical analysis by Sucden Financial using Fibonacci levels.
The attached chart shows how a drop to $1,515 would be a 61.8 percent retracement of the rally from the May 25 low of $1,313 to the high on Aug. 2 of $1,827.
“London coffee futures have made a 50 percent retracement and could descend into a previous congestion area with a target near $1,515, which may also be a support,” said Brenda Sullivan, head of research at the brokerage firm in London.
Global coffee production will rise 11 percent to a record 139.7 million 60-kilogram bags in 2010-11, the U.S. Department of Agriculture’s Foreign Agricultural Service estimated in June. Robusta output will advance 6.4 percent to 53.72 million bags.
The contract for November delivery rose 0.4 percent to $1,597 a ton on the NYSE Liffe exchange yesterday. Robusta, grown mostly in Asia and parts of Africa, is used in instant coffee and espresso.
In technical analysis, investors and analysts study charts of trading patterns and prices to predict changes in a security, commodity, currency or index. Fibonacci analysis is based on the theory that prices tend to drop or climb by certain percentages after reaching a high or low.
To contact the reporter on this story: Alistair Holloway in London at aholloway1@bloomberg.net
Rate this Page