Arabica closed out the week sinking to 97.00, -0.70 basis KCU, holding the lifetime contract low by a mere 30 points. The day started off well, gaining steam during the overseas hours before trading a day over day high around 7am EDT. Some catchup weakness from the BRL was to be expected, however the chart was showing signs of a short term low having been made overnight and risk was primed for a rebound. By end of the day however, the commodity complex was broadly lower, dollar was +0.67%, BRL -2%+ at its low, the S&P had swung negative, and spec selling appeared to successfully defend the 9dma. Option expiration seemed likely to hold prices in place and that they did; KCN came perilously close to the 95 line, settling 95.20 after posting a 94.90 low, and it will be interesting to see if there are any in the money calls abandoned or out of the money puts elected (1199 N 95 P OI entering the day). Robusta too suffered, slipping $15 to 1212. Pre-settlement selling was noted driving prices to their low as the weekly marker set to commence. N/U went out unchanged at -31. Certs fell again in both markets, but seem to be an afterthought for the moment. London inventories were down another 87 lots / 14,500 bag equivalent, while NY stockpiles fell 8681 bags to 1,673,403. 4675 were graded overnight, 3025 passed for a gross draw of 11,706.
Coffee tumbled again with KCN closing 96.75, -1.05. OI has rolled over into U, yet outright trading remains in KCN - although today may be the last that that statement holds true as U outright volume came within roughly 400 lots of N. Volumes ticked up in both futures and spreads on Day 4 of the index roll, typically the most negative of the period. It is perhaps a sign of the times then that N/U tightened 10 points to -1.80 after weakening for the prior 3 (typically stronger) days. Roaster buying was noted in increased volumes in all 2020 calendar contract months. The BMF will be closed tomorrow for Corpus Christi with no BRL or coffee trading. Although Sao Paulo had moved the holiday forward to accomodate social distancing, the exchange chose to keep market observation in place, thus tomorrow’s closure. Certified stocks fell an eye popping 36,931 bags, however pendings grew 29,885. Adding the 7046 bags that did not immediately get regraded to an expected 10,160 bags that will fail using recent passing rates, there is a “real” 17,206 exchange outflow. London was a mixed bag with the active RCU contract rising $6 to 1253 and the prompt RCN falling 7 to 1214. N/U settled on its low, -29, a mere dollar off the lifetime low. The USDA wrote down coming Vietnam crop on lower potential yields due to weather, yet it bears mention that conditions have deteriorated further since the time of the rainfall charts included in the GAIN report.