Heavy rains over most of the Brazilian territory are still set to be irregular for the coming days, but as Bloomberg reported, widespread precipitation is seen reaching coffee producing areas in Brazil’s southeast next week. That conditions should bring relief after a long period of dry weather and high temperatures that hurt yields for arabica crops.

J.P. Morgan pointed out that drought across much of Northern and Central Brazil has and will continue to threaten the coffee supply outlook until the wet season materially arrives. Traders now expect stronger rains next week and that conditions can pressure strong, upward coffee momentum, driven by supply deficit concerns.

COFFEE, H1 Interval

Falling below EMA100 (black line) may indicate test of $256 level, where we can see 38.2 Fibonacci retracement and lower range of the upward price channel. On the other hand, rebound from current levels may open a way for reaching new, local highs near $280.

 

Source: xStation5