Good Morning!! The coffee market seems to have at least for now, stopped going down and is showing some signs of short term consolidation. The active selling from producers and long liquidation from speculators has eased and prices have stabilized near the 190.00 area. Relatively speaking, in comparison to other commodities, coffee’s weakness was minor as the market also held up well on the news of rains over the weekend, with more rains forecast this week. The short term technical action remains weak, but there seems to be less aggressive sellers in play. The long term supply fundamentals remain bullish, and buyers can wait for some more stability and consolidation before looking at entry levels. December support comes in near the 185-186 levels, with key support at the 200.85.
ICE Coffee Futures Continue to Fall on Weather News
Arabica coffee futures continued the recent trend , declining 850 points to settled the active contract for December delivery at 191.10 cents a pound. Expectations of rains for this weekend in the main growing coffee regions encouraged the speculative liquidation. Activity was moderate with volume reaching 18,762 lots , including 4,213 switches. The active December /March switch widened 5 points to end at -4.20 cents. According with SOMAR, after the weekend another cold front will bring good rains to the entire region. Coffee prices were influenced by other markets that fell today. The commodity index fell 262 points to 484.72, near the recent lows. Commodities declined as the dollar rise and subdued US inflation cut demand for gold and precious metals.
London Market - London had put in a very presentable performance yesterday, climbing off of the lows in the latter part of the session to end the day broadly unchanged. The strong close implied followthrough buying and the early action this morning tended to support that; fresh short-covering taking levels through yesterday’s highs in the opening minutes. From there on, someone wasn’t reading the script. Volume dropped to a dribble as the board stagnated ahead of $2070, scale origin offers enough to stymy any further strength. Despite several attempts to break higher, resistance held through the afternoon before values eased into the end of the day to end the session back on the defensive. 11,410 lots of volume is the lowest turnover of the week and one of the lowest this month. The structure eased slightly in line with the outright with Nov/Jan trading back to $14 discount.
ICE Coffee Futures Finish Slightly Higher
Arabica coffee futures closed slightly higher Thursday marking the end of a very quiet session with most of the market’s participants looking for fresh fundamental news. The most actively futures contract for December delivery settled 110 points higher at 217.10 cents per pound. Volume was scarce with only 16,804 lots exchanging hands today. The session traded within yesterday’s range today, and this is the 8th straight session where we have traded within last Monday’s range. In related news, Somar Meteorology kept its forecast for hot and dry conditions in the main coffee growing regions of Brazil. The extended forecast calls for rainfall that should cover southeast Brazilian coffee belt. The commodity markets closed mixed today CME Ethanol up +4.01%. among the biggest winners.
London Market - New York’s late day surge to the downside called London lower this morning and for the first few minutes at least, the market did not disappoint. Values fell sharply during the initial exchanges, breaching nearby support at $2165 before sliding another $30 in less than 10 minutes. Selling done, the board promptly went into reverse trading back up to encounter light origin selling scale up. No change in the mid-session weather forecasts left many players out of ideas and the afternoon’s action reflected that. Volume was the lowest of the last three sessions coming in at just 15,413 lots and even then turnover was boosted by an active front spread, trading into -7 before easing back to end the day at -14. Liffe Certified Stocks are due for release this evening.
Good Morning!! December coffee has traded inside the recent range of October 6th for the past 6 sessions and in the process has corrected some of the overbought conditions. Ideas that the Brazilian crop is still under stress until the rainy season begins in another week, and that the portion of the crop which may have flowered in September is still vulnerable to aborting flowers, have helped provide support for the market. Prices were able to finish with a solid gain yesterday and climbed up to the highest closing price since February of 2012 as hot and dryer weather have also been an ongoing concern. London Robusta closed lower on the day and after some choppy two sided trading, speculators emerged to give it some support towards the end, but London is now trading higher on the heels of the New York rally yesterday. Open interest is in a steady uptrend move, and the latest COT showed a steady buying trend from fund traders. While short term overbought conditions till remain, the market continues to attract buying interest as coffee could see a global production deficit for 2 straight seasons. Buying support comes in at 217-218 now, with the nex upside target still near the 227-228.
Good Morning!! A lack of rain in the Brazil forecast has sparked aggressive buying on the opening and the market pushed all the way through the April highs. Until there is a sign of widespread rains to spark a nice even flowering period, coffee traders are going to assume even larger losses to the 2015 crop than are possible. Traders believe that nearly 50% of the coffee belt in Brazil has not seen enough rain to spark flowering, and many traders see a lack of rain for the next 3 weeks as a supply threat. Coffee interest is up nearly 10,000 contracts since the mid-September lows as coffee seems to have the longer term fundamentals to attract significant buying interest fund traders. Coffee is one of the few commodity markets with the threat of 2 years in a row of global production deficits. Until there are confirmed reports that there are consistent rains in the forecast, buyers will continue to scramble for coverage. Buying support for December comes in at near the 214.00 and then 205.00, with resistance with no major merit until the 245-250 range.
Arabica-Coffee Futures Surge to More than 5-Month High; Cotton Falls Lack Of Brazil Rain Causes Concern For Production This Year And Next By
Oct. 2, 2014 9:25 a.m. ET
NEW YORK—Arabica-coffee prices surged 6.7% on Thursday to the highest level in more than five months as a lack of rain in Brazil fueled concerns that production will be constrained this year as well as the next.
Arabica for December on the ICE Futures U.S. exchange rose to $2.1375 a pound, the highest since April 25 for the most actively traded contract. The contract recently traded up 5% at $2.1050 a pound.
Brazil is the source of about half of the world's arabica beans, and a severe drought early this year clipped output. Weather conditions remain drier than usual, and that has raised worries over next year's production.
"With no significant rainfall in September, an alarming situation with substantial losses for 2015 is projected," Brazil's National Coffee Council said in a note Wednesday.
Brazil's coffee-growing areas are expected to remain mostly dry until the second week of October, according to São Paulo-based forecaster Somar Meteorologia. That lack of moisture could hurt arabica trees already weakened by Brazil's worst drought in decades.
"If it remains dry, that's a problem," said Rodrigo Costa, a head of the coffee desk at brokerage Newedge.
Arabica futures prices are up 93% this year, and the sharp rise has prompted roasters including Starbucks Corp. and J.M. Smucker Co. the maker of Folgers, to raise prices for consumers.
Cotton futures turned briefly positive Thursday morning after the U.S. Department of Agriculture reported net-export sales of 226,400 bales during the week ended Sept. 25, up 45% from the previous week. Cotton for December was recently down 0.3% at 61.95 cents a pound, after reaching as high as 62.56 cents.
"Weekly export sales as of Sept. 25 were better than expectations of 100,000 to 125,000 [bales] due to large sales to Turkey, China and Thailand," said Sharon Johnson, senior cotton specialist and introducing broker for KCG Futures in Atlanta. But a record global glut is expected to continue to weigh on prices.
Orange juice for November was down 1.2% at $1.432 a pound, while December cocoa was 1.1% lower at $3,137 a ton, a more than two-week low.
Sugar for March was up 0.9% at 16.18 cents a pound.
ICE Coffee Futures Close Firm on Weather News
Arabica coffee futures closed firm Monday as less than expected rains in Brazil during the weekend prompted speculative short-covering. The most active contract for December delivery settled 520 points higher at 191.25 cents a pound. The volume reached 15,068 lots, including 2,304 switches. Rains in the main growing areas were reported to cover only a 25 %, with less amounts than previously estimated. In addition, World Weather Inc. from Kansas, predicted that rainfall during the first 10 days of October will be below average. With the prices respecting the support under 180 and less rains in the forecast, it appears now that short players are getting nervous and will be forced to cover. An advance above 192-195 on the December contract, will push the prices against the 210 level.
London - Generally the transfer of the Robusta contract to ICE went well this morning with the main issue being the price reporting codes changing for most vendors. Opening strength attracted overnight selling as the board recorded early weakness. Light Asian price fix buying provided underlying support with Vietnam supplying resting selling scale from 1960 as an overhang in early activity. Some evidence of arbitrage interest with the selling of London against New York as the market worked on verbal reports out of Brazil of rains not hitting areas or levels forecast into the weekend.
London COT numbers reflected a similar pattern to New York with the market $56 lower and the open position down 1,663 lots which immediately suggested more liquidation from the Managed Money long. Gross long was down 4,309 lots which took the net long down by 4,738 lots to 22,374. The Merchant position increased its gross long by 5,713 lots which reduced the net short by 4,778 lots to 24,835. This looked like a clear position switch between the categories which appeared to fit the general perception that the market had of last week’s action.
Levels consolidated the lift into the afternoon as prices worked back towards short term averages in preparation for the end of the quarter tomorrow. The base area of 1920 in November remains the downside marker.
ICE Coffee Futures Revert Previous Gains
Rain forecast for Brazil and the weakness of the currency knocked down the coffee market Thursday. Coffee for delivery in December, the most actively traded contract at the New York ICE market, fell 680 points to close at 182.30 cents a pound. The speculators now, less concerned with a possible dry period in Brazil opted to liquidate positions, at the same time the decline of the real encouraged producers selling. The real fell 1.06% today, trading at BRL2.4231 at 3:00 p.m., on concerns that the Brazilian economy will be struggling to recover. In other news, in Colombia the peso fell 0.5% to COL2, 018.97, the weakest level since March 18. Trend is for further declines due to the trade deficit, falling foreign investment and lower oil prices according with analysts.
London Terminal - The market was prepared for follow-through buying in London after the actions of yesterday but immediately into the move higher the board attracted a mix combination of selling comprising trade and origin. This contained the move with levels easing back in line with the lower early performance in New York. Traders were constantly searching for excuses behind the aggressive move of yesterday with focus as always on Brazil. Important activity was recorded on Jan/Sept trading at between 41/42 discount to attract the main attention which amounted to 4,925 lots on the day. This reminded players of some 6,000 lots of the same spreads that was traded a few weeks ago at $35 discount. On that occasion it resulted in an increase in the open position. Approaching month end and end of quarter will provide another influence to the flow of the market into next week. Yesterday’s exposure increased for the second session implying that the lift in prices did pull in some longs. Looking back on the working exposure the market carried last year we are only 1,000 lots lower but prices are $236 higher! The board continues to hold the 1920 marker which will be crucial leading into the weekly settlement tomorrow as the market battles to find its level for the last quarter of the year.
ICE Coffee Futures Close Higher on Short Covering
Arabica coffee futures bounced slightly from a more that two-month –low settlement on Friday on speculative short covering. The nearby contract for December delivery settled 140 points higher at 179.75 cents a pound. Volume was modest, reaching only 13,416 lots, including 2,928 switches. The prices were under pressure early due to the rains in the Brazil growing areas reported during the weekend and forecast of more rainfall for the next two weeks. The devaluation of the real added pressure on the market. The currency lost 252 points trading at BRL 2.3937 near the closing time. Prices get help from the technical picture after support was noted at 17640 for the December contract.
LONDON- The composition of London revolved around the same pattern with the structure attracting the main interest as widening discounts enabled hedge positions to be rolled. A healthy number of “Against Actuals” boosted turnover in November as the market organised for the end of the quarter next week. Flat price action was still trying to find a level as prices operated towards the lows of the range established back in early June. The increase in the certified stock last week was interesting working back the numbers the change in position did not appear to work to the grading numbers suggesting that grading in the previous two weeks were running behind.
The open position for Robusta continues to edge lower on a daily bases reflecting the liquidation of nearby longs. November on Friday recorded the main change down 1,977 lots the bulk of which was rolled down the board. It appears we are entering a period of management from the spec longs involving part liquidation part rolling which is creating most of the action.
COT numbers recorded liquidation from the “Managed Money” longs taking the net position down to 27,112 which still leaves a gross long of 30,000 open which is big. “Merchants” covered shorts into the weakness reducing the net short to below 30,000 lots. Over the week the board was $83 lower with exposure down 3,195 lots. Prices continue on the defensive for Robusta as more liquidation pressure materialises with the 1920 being the next downside trigger in November