Arabica coffee futures bounced Monday as traders speculated about a large decline of the GCA monthly statistic. The active contract for March delivery closed 465 points higher at 178.65 cents a pound. Economic and fundamental factors put pressure on the coffee prices early on the session. The Brazilian real fell to a nine-year low after a decline of 0.26 percent of the GDP during the October was reported. The real ended at BRL 2.6872, down 1.2%. In weather news, good rains with ample coverage are expected for the next two weeks, to cover the main growing regions in Brazil.
London Market - Activity began to slow today ahead of the end of year festivities with traders focussing on sorting out their last shipments of the year. The Jan/March traded at a $30 discount throughout the morning session, pressured by industry rolling paper longs down the board as well as arbitrage traders shorting the H15/H15.
Robusta COT numbers showed the managed money player diminished exposure by 1,075 lots bringing the net long to 19,229 lots, representing a decrease of almost 13% since the beginning of November. As to be expected, the merchant section of the report indicates industry short-covering and new longs fixing into the weakness with traders eyeing the $2,020 level as an attractive entry point.
The Brazilian Real is one to watch and may determine much of Robusta’s performance in the coming week. If the currency is to further weaken, Arabica prices may continue under pressure and provide support to the Robusta market in the short-term. The market is dangerous however and very susceptible to liquidation if Arabica prices are to surge