Coffee gathered slight gains, closing 30 points higher at 106.95. Trading was choppy and while the VWAP on the day was roughly 90 points higher, a 15 minute long surge in futures from 9:15 to 9:30 boosted both the price and volume in what was otherwise a fairly subdued session. Uncertainty is high a week before the US election. Another 21,439 bags were graded today with a pass fail of 12,774/8665, Certs increased by 12,774 (1,141334), pendings (50,172). Robusta was the more dynamic market and drove the bulk of conversation. Jan futures rose $38 to 1351, spending virtually the entire session above yesterday’s high. Using the YTD range, Jan pierced the 38.2% Fibonacci retracement of 1333 in the process. XF rallied $17 on first notice day, yet even with sizeable recent gradings and 2627 lots of OI, no tenders were noted. F/H was also a gainer on the day, rallying $2 to -6.
Coffee traded a bit of a wild day, closing 255 points higher at 106.70. Futures were quiet early, were predictably sold at 8am, and it seemed like the forces of trend, dollar, and negative sentiment on stimulus would doom KC. However, the BRL has renewed itself as an increasingly important input to daily trading as the 10 day correlation has risen to -.60, the strongest in nearly two months, and as the currency began to improve so did coffee. The initial upticks were predictably sold, yet roaster bids around the lows helped hold prices before 1000+ lots of buying sent futures flying. Z/H (-2.70, +.15) followed and the narrative began to swing – traders quickly highlighted improved spot demand from industry, concerns about Brazil deliveries, the potential of the open gap holding, etc – and selling dried up in the process. The 100dma crossed the 200 dma as well basis KC2, which leaves the 50 above the 100 above the 200, a pattern that had great success last November. The reversal also put prices on the cusp of reentering the 107 / 113 range that held from Sept 21 through this past Friday, Oct 16, and was the first positive settle since Oct 13th. Technicals are still broadly negative, and the downtrend channel remains in place, but for at least tonight there is some optimism for the bulls. Certs should advance that feeling of good will, as gradings again posted a negative pass rate with 4160 bags failing and 3845 passing (all Brazil). 285 Burundis were drawn from the stock, for a net build of 3560. London also performed well, bouncing back over the 1300 line for a 1307 close, +28. While XF continues to weaken with 2 trading days left before notices go out, -31, -2, FH caught a bid settling -6, +4.
Arabica fell 175 points to 107.20 to start the week. KCZ/H weakened 20 points to -2.20, Z/Z settled its weakest level since June at -7.95, -.75, and certs were unchanged with a 9960 bag increase to pendings. The positioning remains a risk in the minds of traders, reinforced by Friday’s continuation of the stubborn spec long, and it seemed jobbers were the most active source of support on the day. Outright volume on the day was well below recent norms, while active spread trading boosted total volumes to around average (42,816). Options were unusually quiet, led by a mere 664 Z 125 C, with aggregate volume of calls and puts 9022, less than ½ of Friday’s standout volume. The FX was unusually dismissed, particularly for such a quiet day overall, as the DXY was under pressure for the bulk of the trading day, but particularly from 10am onwards. The BRL likewise tightened as much as 1.9% during coffee trading, extending those gains later in the day to 5.55, +2.4%. Robusta was weak as well, falling $22 to 1268. XF lost $4 to close -25. All in all it was a less dynamic session than the market has been accustomed to this year, something that by nature is unlikely to remain the case for long.
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