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Arabica Coffee Futures for December delivery settled slightly higher on Thursday, gaining 50 points at 152.70 cents per pound. Prices remained near the 20 day moving average (151.45 for dec) throughout the session once again, suggesting neutral levels. Speculative buying attempted to push prices higher, however the movement was capped by overhead origin selling, pushing prices back to the nearby oscillator. Short term speculators dominated the session, keeping prices on a tight range on lack of fundamental news. In related news, Japanese coffee inventories fell 4,477 tons during the month of August. Japanese inventories reached a record high during July at 210,762 tons. USA GCA stocks will be published tomorrow. November options expire tomorrow.
London Market-Spread activity dominated the session as nearby structure continued to weaken ahead of first notice day, while the Jan/March switch pinched into backwardation. Open interest increased by a further 2575 lots, with spec long positions running into fresh origin shorts as flat prices maintained the recent moves to the upside. Interest in the Nov/Jan accelerated with over 10,000 lots traded with values weakening $3 into the hands of the commercial short at -$35. Significant option activity occurred as 2000 lots of the Jan 1900/2050 call spread were bought at $99 with 560 Jan futures sold at 2073. Further upside protection was sought with 1700 lots of May 2300 calls traded at $61. Conversely 2000 March 1900 puts were bought at $38 with a 22% delta hedge at $2076 as participants continued to search for cheaper downside protection as the board moves higher.