INTL FCStone Daily Coffee Report for July 26/17

Arabica coffee futures for September delivery settled 195 points lower on Tuesday at 130.60 cents per pound, pressured again by technical factors. Activity was slow as typical of the summer, with the price action accelerating when the market broke the 132.00 key level on the September contract.  The dollar recovered from early weakness as the repealing/healthcare perspective turns more optimistic in the US Senate. The us/real went up 182 points to USDBRL3.1654. The weather in Brazil remained dry across the coffee belt with temperatures in the 40s and 50s, turning cooler during the next 6-10 day period, but without any frost threat, according with analysts. In other markets, crude oil gained 3.0% to $47.90 per barrel, after Saudi Arabia promised to cap exports to 6.6 billion barrels per day in August or 1.0 million barrels per day less than August 2016.  Equity markets were firm, posting new highs.
 
London remains firmly rangebound for now, defying further weakness in New York to hold around $2100 basis September. The arbitrage narrowed through 34.5 cents, having traded out as far as 40 cents last week, as London held resolutely around the $2100 option strike. A brief test through yesterdays lows failed to attract additional technical selling leaving the short-term parameters intact, for now.  Activity surrounding the July delivery month has slowed over recent sessions with only 11 tenders and 4 re-tenders since the beginning of last week. Open interest for the contract month stands at 1,620 lots with under a week to go until the last trading day. Attention turns once more to the macro with the culmination of the Fed’s two day meeting due tomorrow, post market hours.