Arabica and Robusta Coffee futures extended yesterday’s price recovery on the back of stabilizing global markets, including emerging market currencies. The active Arabica contract for December delivery climbed 2.35 cents to settle at 124.55 per pound. Volume was moderate for the session as prices recovered above the $1.25 level on the way to a $1.26 high. The Brazilian Real rose 550 points and the Colombian Peso rallied nearly 100 pesos discouraging Producer/Exporter selling. As a result, soft commodities joined energy, grains and metals markets in the ascent as the Bloomberg commodity index rallied over 3% today; however, still down nearly 16% for the year. China’s economic moves this week whereby key interest rates and bank reserve requirements were lowered have been seen as positive developments by world markets, as risk-averse investors have begun to step back into equities and raw materials, including Coffee. Moving forward, with the end of month book squaring now under way we note that December futures are down only 3.07% for August despite the current bearish outlook and perceived downside risk for commodities overall. A monthly close at 128.50 basis December would leave Coffee prices unchanged for August. In macro factors, oil climbed above $40 a barrel and the US stock markets remained firm after data showed the US GDP grew more than expected, at 3.7 percent annualized during the second quarter.
Arabica coffee futures ended higher Wednesday following the revision of the 2015 Brazilian
crop estimate by Volcafe. The active contract for December delivery settled 165 points
higher at 122.20 cents a pound. In the report, Volcafe, estimated the 2015 Brazilian crop at
48.3 million bags, down 3.6 million bags from their previous estimate they did on
May. Conillon output is estimated at 15.7 million and Arabica at 32.6 million. The figure
pushed down the average to 47.1 million from all major estimates published this year so
far. Total global deficit is forecasted at 3.5 million from 6.4 million deficit during 2014-15
season, they added. In other related news, Brazilian coffee inventories at the end of March
were estimated at 14.3 million, down from 15.2 million March 2014, CONAB said. Currencies
in producing countries were mixed, the real recovered modestly while the peso continued to
decline, trading at BRL3.6010 and COP3,259.3 at 3:45 pm EST. US stocks recovered after six-
day selloff, adding the bullish sentiment.
Arabica coffee futures fell Tuesday on speculative selling. The most active contract for
December delivery settled 115 points lower at 120.55 cents a pound. Market sentiment in
general was less bearish with the recovery of some commodity and the equity markets.
Currencies remained to affect the coffee prices. High volatility of the euro and the producing
countries currencies was noted today. In Brazil, the real lost power after an early rally. The
BRL was trading at BRL3.5816 - 290, at 3:00 pm EST. In Colombia the peso recovery slightly,
trading at COP3, 208.7 at 3:00 pm EST. In coffee related news:
- Rabobank sees global deficit of 1.9 m bags in 2015-16 crop year
- Starbucks CEO says market volatility won’t affect growth plans
- ICE Certified Stocks up 3,949 to 2,089,150 bags
Arabica coffee futures lower Monday in another general selloff of the commodity and equity markets. The
active contract for December delivery settled 475 points lower at 121.70 cents a pound. The volume reached
40,291 lots , including 6,905 switches. The active December – March switch widened 10 points to end at - 3.55 cents. Markets throughout Asia and Europe tumbled early, with the DJ index trading 1,000 points down after the opening. The sharp fall impacted all commodities as the oil that traded under $38 per bbl, for the first time since Feb 2009. In the currencies, the real and the peso again were under pressure, trading at BRL3.5513 and COP 3,222.10 at 1:45 pm EST. In weather news in Brazil, a cold front will bring rains to Parana, Sao Paulo and south of Minas Gerais during the next 4 to 5 days. Mostly dry weather will return to the coffee regions early September, according with SOMAR.
Arabica coffee futures continue to fall Friday on forecast of rains for Brazil and macroeconomic factors. The active contract for December delivery lost 600 points to close at 126.45 cents a pound. The volume reached 39,074 lots, supporting the commercial activity. Activity on the December / March switch was also noted with 5,342 switches traded. The discount appears to start attracting buying interest anticipating a possible narrowing for the December delivery. On weather news, SOMAR said Friday, that a cold front with good rains will enter the coffee regions during the weekend, breaking a dry and hot period. Rains will help a good flowering according with several sources. Currencies of major producing countries fell against the dollar. In Brazil the real was trading at BRL 3.4950 and the Colombian peso at COP3, 101 at 4:15 pm EST. The COP peso fell for twelve consecutive day. The turmoil continued affecting the world stock markets. The Dow Jones declined 531 points or 3.1 %, as signs of a sharp slowdown in China caused a global equities sell-off. During the week, Arabica prices declined $0.1470 or 10.4 %. Heavy liquidation ahead of the FND and the global situation caused the drop.
Arabica coffee futures fell again Thursday on last minute liquidations ahead of the first notice day. The nearby
contract for September delivery, closed 350 points lower at 127.65 cents a pound, while the active December
contract lost 235 points to settle at 132.45 cents a pound. The active September/December switch widened 115 points, ending at -4.80 cents, under heavy selling. The Colombian peso remained weak, trading at COP 3,061.5 at 3:45 pm EST. Commodities in general were steady, but the world equity markets suffered strong declines. Another negative day for China concerned investors about the global growth. In coffee related news, harvest in Brazil has progressed 84 % by August 19, compared with 93% last year, according with Safras & Mercado. In the report they forecast the 2015 crop at 50.4 million 60 kilo bags.
Arabica coffee futures declined Wednesday induced by a general fall of the commodity and equity
markets. The nearby contract for September delivery settled 415 points lower at 131.15 cents a
pound. Volume was boosted by switches and a large volume of against actuals. Total volume reached
57,108 lots; 17,308 switches; and 7,659 AAs. Repos ahead of the September delivery revealed the
AAs. Currencies of Brazil, Colombia and Vietnam remained weak adding weight on the coffee prices.
The COP traded at a new historical low of COP 3,042.70, ending at COP3, 022.9. Commercial activity
from origin was noted in today’s session. Producers were good sellers taking advantage of the
depreciation of the currencies. US stocks fell as energy stocks continued to fall. Concerns about China
growth affected consumer stocks as well.
Arabica coffee futures contracts closed 55 points higher on Tuesday at 134.70 for the September contract. Total volume reached 36,748 lots, with 11,546 switches. Open interest in the December contract reached 89,302 lots, while the September contract only held 25,605 lots. This shows the recurring rolling over, since first notice day is just around the corner on August 21 st . The September contract reached a high of 136.35 in the morning, and kept a down trend throughout most of the session. Towards the last two hours of the trading day, the market reversed, closing with a 0.55 cent gain. Most of today’s action was technical and driven mostly by the anticipation of first notice day with closing positions, however news of a strengthening El Niño, and uncertainties of Brazil’s crop keeps the market at bay. The Brazilian real closed at BRL 3.4648, down 150 points. The Colombian peso devalued slightly ending at COP 3,003.70.
Arabica coffee futures for September delivery closed lower on Monday after a very volatile week as a result
of options expiration last Friday. The September contract settled at 134.75, down 275 points. The volume
reached 44,477 contracts including 15,861 switches. The U/Z structure keeps widening and it reached the
lowest level since the 26 th of May at -3.90 before settling the day at -3.75. The open interest on Friday was
reduced by 5,996 lots, which reflects the short covering behavior that the market has had over the past
few sessions. The down move was mainly influenced by an overbought technical condition on the daily
chart and the rumors of an increase in the GCA warehouse stocks, that was later confirmed by the
publication of their monthly report with a total of 5,833,349 bags of inventories for the month of July,
which is 7% higher than the inventories of the previous month.
Arabica coffee futures for September delivery closed on positive territory again influenced mainly by the technical action of the options expiration, the ongoing concerns of the yields in the Brazilian 2015/16 crop and the recovery of a Brazilian Real, that remains close to its historical lows. The September NY coffee contract settled at 137.50 cents per pound, 45 points higher. The volume reached 58,348 lots including 20,308 switches. The U/Z switch keeps widening and finally settled at -3.65 ahead of first notice day next Friday. The open interest in the U calls with strikes close to current levels was significantly higher than the open interest for the U puts, therefore the owners of these long calls made sure that the market remained well above the 135 level, where most of the open interest was to make sure they got their long futures at 135. On the fundamental side, the trade house Terraforte released a report reinstating their Brazilian 15/16 estimate at 47.3 million bags and affirming concerns over the carryover stocks, estimating these at 4.65 million bags, 67% lower than the carryover stocks from a year ago, which also provided some bullish tone to the market today. On today’s COT report, the speculative funds reduced their short position by 7,156 lots or 62% between August 4th and 11th , which shows the concerns of the industry over the lower yields in the
Brazilian crop this year.