ICE Coffee Futures followed its recent pattern of slight change, edging higher on Thursday. The active contract for May delivery settled 45 points higher at 137.75 cents per pound. Prices remained in positive territory throughout most of the session, reaching an early high and finding support near unchanged levels. Short term speculators have played both sides of the market as switch activity dominates volume, with 44531 lots traded including 14141 switches. Lack of fundamental news have also contributed to the sideways price action. Little futures price activity parallels a relatively slow physical market. In options, volume was noted in the July 150/175 Call spread trading 500 times.
A subdued session in Robusta as values continue to operate in a narrowing range straddled by May17 option exposure and a tight arbitrage.
Focusing on the May17 options expiring on the 19th April, accumulated open exposure of the ATM money calls through to the $2300 strike stands at 15,728 while ATM money puts through to the $2000 strike stands at 10,982 lots. This straddling exposure has prevented may17 futures contract posting any notable action through the course of this week, operating within a $31 range. The May/May arbitrage remains a weight on Robusta as participants are reluctant to sell values sub 40 cents sighting a near record fund long resting in London with NY holding a small short.
We used the word equilibrium yesterday to describe the current stance of the London market, this will not change unless values start to increase option delta management through either $2100 or $2200 basis May17.