ICE Coffee Futures Slide Down
Arabica coffee futures fell back again today after two days of small gains. A weaker real in Brazil incentivized exporter selling, and the active contract for July delivery fell 135 points to settle at 127.65 cents a pound. Volume, still mostly generated by switches basis July, reached 31,000 lots and set a good pace for the beginning of the week and the month. Brazil’s director of monetary policy, Aldo Mendes, stated that the real’s weakness was inevitable as a part of the global trend of currencies devaluing against the dollar. The real closed at BRL2.1348, just shy of the 2.15, a level it last reached in 2009. The Brazilian government also announced an 18% increase to farm credit for the 2013/14 season, reaching a total of 64.2 billion USD available for financing operations to improve production in grains and soft commodities. With the market facing lower again, ICE futures will be looking to 125 basis July as the near technical support while 130 remains the near level of resistance. London: Volume struggled during the early stages with the board once again lower with the turnover looking towards the structure. The July discount edged slightly narrower trading towards $28 but not in the same volume as we had recorded into weakness which was the important fact of the morning. Nothing showing for grading during the opening 2 days of June but the focus will be on movement of stock in consuming countries particularly if we move into the slower off take period and the Exchange position starts to decline which is a possibility with the origin situation as it is with differentials strong. Little change in the characteristics of the London Terminal with the board comfortable in probing lower but at the same time not inducing fresh involvement as the lack of volume reflected. Well into the Indonesian season and we are yet to have any impact upon the futures market. Exports out of Sumatra are reported well above last season during the month of May, but that was to be expected as the volume broke 22,500 tonnes to record the largest monthly performance since February when old crop stocks were moved. Trading range remained tight into the second part of the day as the board operated around unchanged but still not doing enough to test any resting origin selling which materialized again above the board both in July and September. No change to the technical format with the board looking to test towards the lows back last December of 1855 bases the second position unless we can engage covering above 1920
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