ICE Coffee Futures Close Modestly
Higher Arabica coffee futures closed modestly higher Monday at the end of a quiet session. The active contract for September delivery settled at 120.15 cents a pound after consolidating between 121.25 and 118.70 cents range. Volume declined to 13,738 lots. Speculative short-covering provided support to the prices as the market bounced from the lows. Markets in general remained distressed after last week FED announcement. In coffee related news, USDA published estimate for 2013-2014 world crop at 146.0 million bags, a decrease of 4.4 million bags from previous year. Brazil production was forecasted at 53.7 million bags, down 2.4 million from 2012-2013. Colombia estimate at 9.0 million bags and Central America and Mexico at 16.5 million bags. In Brazil, the real closed firm against the US dollar at BRL2.2260 from BRL2.2406 last Friday. London: The market had a lot to consider regarding freight changes in July from Asia with increases of some 30% being reported which indicates that it will cost towards $1000 per box to ship coffee out of Vietnam next month. We have a week before first notice day for Robusta and the open position in July was carrying almost 17,000 lots entering today’s business so we have a lot to address over the coming days. Robusta COT numbers showed the Managed Money long towards unchanged over the last week which was not what the market was expecting considering the fact that the board was $60 lower. Ideas were placing the fund towards 12,000 short in the numbers as against 9,671. More volatility trades boosted the option turnover into the afternoon which generated some buying of futures. The market was lacking the presence of origin which allowed a lift in level’s but the board made hard work of the move giving ground back into the afternoon as the market spent time in addressing the spot month ahead of the delivery period starting next week. Exposure in London was down 1,312 lots leaving a net open position of just below 110,000. The reaction in prices was enough to change the momentum of the market slowing the algo style sellers into the afternoon allowing the market to settle towards the highs of the session.
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ICE
Coffee Futures Settle Lower but Off the Lows Arabica coffee futures settled lower but recovering from early losses. The active contract for July delivery closed 105 points lower at 127.70 cents a pound while the September contract declined 125 points to 129.60 cents a pound. A heavy number of switches boosted the volume that reached 63,212 lots. The active July-September switch narrowed 20 point to end at -1.90 cents. The prices were pressured early on origin selling and the London market action, however short term spec short covering made prices to recover. In Brazil, the real reversed course and closed with gains following a sale of more than USD$2 billion swap auctions by the central bank. The real traded down to BRL 2.16 before to the bank’s intervention but bounced to end at BRL2.1350. Commodity and equity markets fell today following comment from the Bank of Japan’s Governor Kuroda saying that there is no need to extend monetary stimulus. More volume coming together as the board worked lower with the combination of more system related selling adding to origin which created a powerful combination into the session. The July structure widened as origin selling pressured the spot month influenced by weaker currency in Indonesia. Vietnam selling which had been building above the board adjusted to compete with the spec selling which drove the weakness. The July discount pushed out towards $25 opening more opportunity to get hedge books down the board before another wave of managed money rolling lifted the discount into the afternoon boosting the volume. Over the last 2 days grading has increased as coffee moves sheds into a delivery position. Another 115 lots were approved today taking the cumulative total approved this month to 323 lots of which 90% has been from Indonesia. As traders update their export numbers from Vietnam the final May numbers is likely to be near 115,000 tonnes which compares with 190,000 tonnes in the same month last year. The figures for July last year reached 141,000 tonnes with many traders expecting a number below 100,000 for this year. Differentials have weakened but overall remain strong. The combination of spec and origin selling maintained pressure into the closing sequence as the board traded to new contract lows encouraging the technical configuration attracting fresh positions. |
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