Arabica coffee futures settled lower Friday but recovering partially from early heavy losses. The market was under pressure on spec selling that extended from last night following the announcement of an increase of initial margins in London. In addition, reports of rains in the Dahlak region of Vietnam added weight on the Robusta prices. The most active “C” contract for July delivery at the ICE exchange in New York ended 4.10 cents or 1.78 % lower at 224.00 cents a pound. Volume reached 37.014 lots including 10,350 switches. Dollar strengthened today after US inflation data for March reinforced perception the Federal Reserve will delay interest rate cuts. During the week, Arabica lost 3.38% or 7.85 cents. Profit taking and technical driven selling contributed to the down move at the same time as the recent commercial buying eased. The volatility declined after the FND on Monday. Cert stocks were down 4,835 bags to 656,657 bags. Pending grading added 5,230 bags to 56,204 bags. No grading on Friday.
COT (CIT) Non-commercials decreased their long position by 3,666 lots to 69,040lots long and decreased their short position by 938 lots to 18,335 lots short, with a net long position of 50,705 lots in the week to April 23rd. The London terminal finally gives some ground ending the session over 3% lower as the recent roaster fixations and hedge lifting slows. The contract for July delivery closed at $4151 -153, trading in a range of 4132/4303. Without these buying elements upside momentum stalled and encouraged the systematic players to shift from long to short, which drove values into a vacuum triggering stop below the previous low. Whilst most participants would not turn bearish after a one-day event, the nearby technical outlook would favour a retest of the old congestion area resting marginally above $4000 basis July24.
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Arabica coffee futures closed with strong gains Wednesday. The firm Robusta market remains as a major factor adding the bullish sentiment. Commercial buying ahead of the first notice day for the May position was significant today. With only two days left commercial price fixing has boosted the market. The contract with the most activity for July delivery ended with gains of 1,120 points or 4.9 % at 240.35 cents a pound. The volume reached 74,220 lots including 22,957 switches. The technical strength attracted speculators and funds buying too as they perceive a situation that could be parallel to that of the cocoa market, which has risen more than 150% this year. In the technical part, previous patterns on the charts, suggest the next objective against the 243/245 area, highs of Sep 2022, and later against 250/260. The market seems to continue disconnected from macro factors such as the weakness of the Brazilian real and the Colombian peso. Certified stocks rose 7,375 bags to 630,856 bags. Those pending certification increased by 1,035 bags for a total of 57,848. Robusta Jul24 contract settled at $4195 +218 with a 4206/3952 range. A new absolute high basis 2nd month, taking out the previous $4,140 high in Sep 1994 (5 MT contract). We are currently facing a financial squeeze on the commercial sector with runaway flat price and a stagnant physical market. This leaves participants unable to get hold of product, and what is available is extremely expensive. Rumours of a very large commercial player buying in the physical space today caused prices to rally (in very large quantities). Shorts continue to cover with the total absence of a natural seller meaning we just trade through vacuums of liquidity. Volumes reached nearly 43k lots total. Robusta Jul24 5000 call traded 1000x @ 65, Robusta Jul24 3800 puts vs 4094Δ30 traded 1250x @ 130. |
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