Arabica coffee futures suffered yet another strong downfall on Friday due to selling induced by weak currencies in producing countries. The most active contract for March delivery settled 515 points lower at 121.20 cents per pound.
Activity spiked, with volume increasing to 28,800 lots, including 4,050 switches. The fall in prices accelerated as large
sell orders suggested managed money entering the market. Between 9:30 and 10:15 am, over 5,000 lots were sold,
evidencing the managed money’s involvement. The Brazilian real fell 1.59%, settling at BRL 3.8690, while the
Colombian peso suffered from crude’s weakness, settling 2.3% lower at COP 3,321.30. Crude oil futures fell $1.13 at
$35.45 per barrel. During the week, Arabica Coffee prices fell $0.0575 or 4.53 percent. Weak technical action,
emerging market currency depreciation, and normalization of rainfall in Brazil fueled speculative selling. Next week
we could have high volatility, since GCA coffee stocks will be published on Tuesday, December 15th, followed by the
FOMC’s announcement of their decision on interest rates on December 16th.