A weak technical action and the depreciation of the Brazilian real, pushed 4 percent down the Arabica coffee futures Wednesday. The most active contract for September delivery lost 540 points to close at 127.00 cents a pound. Prices hovered around previous day’s settlement during the early hours, however the market failed on a weak technical performance and the devaluation of the real. The real declined for the first time in three days, after the Congress passed a bill, increasing the salaries for judiciary workers, surprising the market. The real traded down 365 points to BRL3.1396 at 3:05 pm in Sao Paulo. The drop of other commodities as crude oil and metals affected the coffee market.
London Market - After all the conversations over the last ten days surrounding the July premium we moved into the delivery period this morning. The working open position that started today was 11,299 down only 1,513 lots so we were dealing with big numbers as the market had estimated. The deliveries held the key with the actual number issued being 4,028 lots of which 3,899 were Conillions. This seems to be about in line with many of the calculations which would indicate the adjusted exposure would be down to around 7,000 lots which is still sizeable into the delivery period. Activity after the news was released was very quiet with little change to the structure. Light forward buying materialised from industry with overhead selling tending to back away into the afternoon. Prices edged lower tracking New York but volume was poor with the weaker New York taking the arbitrage differential under 49 cents bases September. The July premium gave further ground into the settlement in extremely light trading to trade down to $35 premium against the flat price uncovering stops below 1769 in the September triggering selling. Although the market broke the near term averages the poor volume questions the action.