Arabica lost 10 points closing 98.20 after a session of mostly positive trading. Early hours were quiet and spec selling was noted at 8am, but the weakness was short lived. Motivated buying arrived shortly around 9am, pushing prices steadily higher for the following hour. KC tracked the BRL for the majority of the day, which of note has strengthened over 13% since early May but lost some footing leading into the settlement period while giving back 1.45 into the day’s end. Volume was well below the past 2 sessions with only spreads really standing out, suggesting most traders are maintaining their wait and see attitude. The spot N/U remained firm ahead of the approaching index roll, gaining 15 points to -1.55 while the rest of the curve saw pressure; U0/U1 weakened 35 points to -9.05. Robusta ended the day +$20 at 1179 settling back above the downtrend channel and posting its first higher high and low in 5 days.
Arabica fell through broad levels of support after failing to uncover motivated buying, settling 99.10, -340. This was the first time the active contract settled below $1 since the KCH contract did so during the index roll on February 7th. A few factors were at play with a weakening BRL, continued shy commercial buy side participation, an apparent increase in systematic selling, and some questionable reports around Brazilian consumption. This overcame a particularly weak DXY day and modest increase in risk appetite across assets. Sentiment has fallen to new lows anecdotally on the back of generalized fear of Brazil and CTA selling along with uncertain demand leading to the accompanying sense of inevitability of lower prices. Weakness was particularly notable in structure as spreads widened down the board, 10 points in the prompt NU and 75 months across N0/N1. It appears interest in the continued disappearance of certified stock has waned after a 8131 bag decrease noted yesterday and another 3952 today. London was unable to hold off the barrage even with an uptick of long side interest, closing 1177, -33. Spreads there were steady at unchanged in the front 2 periods, and $1 tighter carrying into 2021.