Arabica coffee futures bounced from the support area to settled higher Wednesday on speculative short covering. The most active contract for May delivery gained 105 points to 141.75. Volume reached 28,444 lots, including 4,877 switches. The active nearby switch ended a -2.35 cents. Coffee prices were under pressure early during the session due to a weak Brazilian real. The real lost 1.5 % to USDBRL3.1661. The industrial output declined 0.1% during January, indicating that the economic recovery will be slow. In Jan 2016, the industrial output was up 1.4%. A sharp drop in crude oil and a firm dollar influenced all commodity markets. Crude oil fell 5.0% to $50.90 per barrel.
Friday is the expiration of the April options. The largest open interests suggest some support could be at 140 and resistance at 145.
Much of London’s volume was generated via the posting of a 3132 lot EFP in May and a further 3542 lots posted in November which most participants have assigned to forward finance rolling.
Outright volume remained subdued as London observed a holding pattern for much of the session with both origin selling and industry buying all but absent. The May/July switch continued to turnover reasonable volume, holding around $20 discount through 1300 lots with further volumes showing in the July/Sep switch. Afternoon strength in the ‘C’ contract saw London move into positive territory for the remainder of the session, which held going into the close, although further momentum is required in order to draw participants back into the market.