INTL FCStone Daily Coffee Report

Arabica coffee futures were affected today by the devaluation of the producing country currencies. The most active contract for December delivery lost 270 points to end at 161.45 cents a pound. Brazil, Colombia and Mexico’s currencies dropped sharply after better than expected US economic data supported expectations that the Federal Reserve would increase interest rates in December. US manufacturing sector expanded during October at a fastest rate in a year. The real devaluated 1.6% at USDBRL3.2506. The Colombian peso devaluated to COP3,047, and the MEX 1.9% to USDMXN19.24.  Volume reached 52,932 lots including 14,037 switches. The nearby December-March switch widened 15 points to end at -3.55 cents, the weakest level for this delivery. Adding to the bearish sentiment,   CECAFE revised the Brazil coffee exports for September to 3.03 million bags from a previous estimate of 2.5 million bags. The revision was caused by the delay of processing the information due to the strike of customs workers.
 
London Market- For the majority of the session flat price action in the Robusta market maintained its recent sideways action, with the establishment of fresh positions remaining hard to come by. Origin selling was absent, having acted as a lid on price action through recent sessions, although a lack of roaster buying failed to generate a test of recent highs. Having offered little direction for much of the day, a final hour technical breach lower in New York saw prices fall firmly back into mid-range, where last week’s low at $2136 becomes a target to moves lower. With the results of the Fed meeting expected tomorrow, attention returns to the macro as participants look to the dollar for the next wave of direction.
Primary focus naturally remains Nov16 bound as we enter notice period carrying in excess of  3,000 lots. Today’s performance did little in the way of neutralising exposure with only 3 tenders register with minimal futures traded on the terminal. Participants now question the intention of the short holder, in terms of desire to deliver coffee to the board or it is the market awaiting Nov16 fixations.