The UK's surprise vote last night to exit from the European Union night sent the dollar soaring and unleashed panic selling in world equity and commodity markets. London coffee gapped down, trading as much as $47 lower on its opening. The New York market didn't gap down, as it closed near its highs after a strong rally yesterday, but dropped six cents on its opening. Both markets fell to new daily lows at the beginning of the active trading period. Sep16 held its June 15th low (136.10¢). The London market fell to a new low for the day on its close.
September New York (KCEU6) settled in its bottom third (28%), down 5¾¢. Volume was thirty-five percent below average at an estimated 29,393 lots including an estimated 640 EFP's, 256 TAS and 7,145 spreads. 4,175 calls and 4,459 puts also traded. The KCEU6-LRCU6 arbitrage: 61.22¢. Ratio: 1.8087. €: $1.1128-2.3%. BRL: 3.3752/$-1.1%. CRB: -2½%. Crude oil: -5.1%. S&P500:-4.0%. Open interest: 177,170+2,024 (50-day stochastic: 10%; 125-day: 16%).
September London (LRCU6) settled in its bottom third as well (29%), down forty-nine dollars. Volume was sixteen below average at an estimated 15,235 lots including 3,492 spreads and 857 EFP's. 375 calls and 1,040 puts also traded. Open interest: 106,304+2,154 (50-day stochastic: 39%; 125-day: 12%).
CFTC reports that large speculators were net buyers of 7,863 lots of Coffee “C” in the week ending June 21st leaving them net long an even 27,000 lots. Large hedger sold 8,276 lots increasing their net shorts to 65,355. Index traders bought 652 lots (long 33,373). Small traders sold 239 lots (long 4,982).
Uganda exported 286,758 60-kg bags of coffee in May up 8.9% from 263,330 bags in May 2015. 12-month exports were up 14½% year-on-year to 3.625 mln bags.
Dry weather occurred in most coffee-production areas in Brazil Thursday and similar conditions are expected through the next ten days and perhaps longer. Temperatures will be mild to warm with no risk of frost or freeze conditions. - World Weather, Inc. John Bernardi