Coffee Commentary for March 12th

Arabica coffee futures pared losses Thursday as the selling eased. The most active contract for May delivery settled 45 points higher at 132.20 cents a pound. Volume reached 28,216 lots including 7,159 switches. The recent steepening of the forward curve has attracted good speculative participation. The action was driven mostly by short-term specs playing both sides of the market, keeping the market inside a small range. Good support under the 130 level, for the May contract, encouraged speculative buying and some short covering.
Brazil 2015 Crop estimate at 40.3 -43.3 mln , from last year crop estimate of 45.34 mln CNC-Procafe. Arabica 30-32.15 mln, Conillon 10.3-11.1 mln.
LONDON- Robusta was much livelier into the weakness with suggestions of flat price liquidation materialising in May with stops elected below 1810 and 1800 with volume accompanying the move. Front month pressure open opportunities for the structure with May/ July talking some size out to $28 discount. Arbitrage values in May operated back above 52.90 cents after probing lower in early trading which suggested that we could have recorded longs moving out of London and back into New York for the first time this month in good volume.
Overall structure became more active down the board with the Sept/ Nov putting together size out to $21 during the morning. Attention continued on “out of money” calls down the board with over 2,500 lots traded, and the lower market uncovered more industry interest locking in margin.
We are recording the same pattern for exposure in London with the open position increasing 1,574 lots yesterday to 127,640. Just looking back during March so far the position has increased over 9,500 lots!
Vietnam scenario gets complicated with differentials strengthening over recent days and internal movement so slow. Since third week of February Pepper prices have been on a Bull run which appears to have attracted more attention as the spec coffee longs hold firm.