Arabica coffee futures for September delivery settled 195 points higher at 149.95 cents a pound. Speculative short covering lifted the market since the opening today. With near oversold conditions and prices respecting
the 146.50 support level, short players were encouraged to cover positions. A large expansion of the open interest during yesterday’s session suggests new shorts could be in a vulnerable position. The OI increased 4,535 lots as of July 6. The fundamental scenario that brought the prices to these levels remain in place and analysts have begun to foresee that the 2022 Brazil crop could be impacted because of the severe drought that
affected the coffee Arabica plantations since Q4 last year. The dollar traded higher backed by friendly language of the FOMC minutes. The Latin American currencies declined further, the Brazil’s real traded above R5.2800 for the first time since May 27. The COP traded at 3832, the lowest level since May 5.
The Robusta terminal ends the session over 1% higher as values pivot around $1700 basis Sep21, held by premium through sep21 and nov21 based structure. With the freight issues out of Asia dominating Robusta chatter, players in the region have start to slow nearby physical activity, which is shown through an almost absence of origin pressure. Ultimately, this results in all challenges below $1700 to end in failure as the market
fails to attract a sustained seller amid ongoing strength in sep21 and nov21 structure and a light undercurrent of Roaster buying sub $1690.Technically the market is nearing overbought territory but upside trend strength remains intact holding longer term longs into the positions.