Between May07 to May11, the Coffee C market rallied from approximately $1.00/lb to over $3.06/lb. Today, Coffee has pulled back to $1.14/lb, a 93% retrace of the May11 high.
Ironically, one word best describes the current coffee market … exhausted! Notice the lower volatility since 4Q11 and decreasing trade volume since 2Q13.
The collapse in volume suggests the bears are hesitant to force prices lower while the bulls are reluctant to fight the recent downward trend. The Commitment of Traders report suggests positions between the commercial and speculative players have ramped down – another sign of market exhaustion.
Expect prices to spend a substantial amount of time in the $1.00-$1.50/lb range.