Coffee futures setting up for a seasonal trade

The US Dollar experienced slight bullishness yesterday on the back of the FOMC statement which stated that rates will be kept hold until mid-late 2014 and that if the economic landscape progressively worsened, QE3 will be available. Commodities (priced in $) also rallied on the back of this. One trade in particular that looks interesting is Coffee Futures (KC). Seasonally, late July to early August is an aggressive bullish period, historically rallying up 2% before giving it back in a sharp move lower. Therefore, we have seasonals and price action (chart below) weighing on a bullish sentiment. Credit Suisse recently came out with a report (http://www.bloomberg.com/news/2012-07-31/credit-suisse-raises-coffee-price-forecasts-after-bottom-1-.html) which suggests that coffee traded in NY has found a bottom and it is currently trading around fair value which further supports a bullish case.

The above factors give us an edge in the market but is by no means a guarantee, it is important when learning to trade any market that you always think about risk management first and foremost.