COFFEE
General Comments:Futures were higher yesterday, and once again held some support areas.It still seems that New York is trying to form a low in this area.Some support came from news that Colombia Coffee farmers will not deliver as they seek higher prices for crops so they can cover costs and even make a small profit.Reports of rust in Central America and the production cuts that it is causing are getting more attention.For now, it looks like Central America could lose at least 20% of the total crop this year and more next year.Losses next year could be 30% or more of the crop.Current crop development is still good this year in Brazil, and production areas are getting drier weather for the developing crop.There is some talk the drier weather could stress trees.Production ideas remain big there, and also remain big in Vietnam even though producers there talk about the potential for 25% crop losses.Central America crops are mostly harvested.Colombia is reported to have good conditions.
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ICE Coffee Futures Fall to New Lows --By FC Stone
Arabica coffee futures fell to fresh lows on origin and speculative selling Wednesday. The active contract for March delivery settled 190 points lower at 138.75 cents a pound. With only four days for the first notice day for the March contract, February 20th, producer and speculative selling intensified because of the weak price action. Less rolling activity of the funds caused the nearby switch Mar-May to narrow to -2.50 early on the session; however the switch widened to -2.90 cents at the end of the day, after the producer and speculative selling developed. Other markets were mixed today, with the metal and the grain complexes declining modestly. In Brazil, traders returned from the carnival holiday. The Real climbed a little due to a positive foreign fund inflow and the central bank absent. A large decrease of the open interest as of yesterday might reflect the offsetting of commercials positions ahead of the delivery period for the March position. The open interest decreased 4,449 lots to 159,769 lots. In London, there was little change to the opening pattern of trading with the March discount getting comfortable into the $20 zone. Pace of the market was slower into the opening period as levels worked to consolidate. Robusta has a lot to live up to after the action of last week when the board was $70 higher. What was interesting was that the open position over the week was actually down overall which provides a slightly different presentation particularly when most of the conversations have revolved around the increased in long from the managed money exposure. The flow of coffee being put forward for Grading continues with another 120 lots in the system today. This month we have reached 462 acceptable lots which is the best few days in the last 3 months! Changes in exposure in London reflected the rolling of longs with March down over 2,000 lots and the May increasing 2,400. The most interesting adjustment was the fact that the working position in the spot month has now fallen below May which will take over the focus. The March discount continued to edge out into the afternoon trading to $29 with the volume making up the bulk of the March activity on the day. Composition of the Robusta market is becoming somewhat conflicting with the structure weakening against flat price strength. Levels would need to roll over below 2060 bases May to change the upside momentum. ICE Coffee Warehouse Stocks were down 213 to 2,660,748 bags. Pending Grading: 32,391 bags. |
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