INTL FCStone Daily Coffee Report for June 12, 2017

Arabica coffee futures for July delivery finished 20 points higher Friday at 126.55 cents a pound.  Volume reached 71,459 lots boosted by 23,018 switches.  Weather reports forecasting cold temps for some areas south of Minas in Brazil, encouraged some speculative buying early on the session.  However, later the possibility of frost was decreased. The nearby July-Sep switch gained 5 points to end at -2.25 cents. The approach to the delivery period usually attracts a large participation of program and algorism traders. In related news, Brazil coffee exports fell in May 3.6 % to 2.4 million 60-kg bags from May 2016, they were 2.5 million, according with CECAFE.  Arabica exports increased to 1.3%, while Robusta and processed coffee declined 71% and 23% respectively. During the week, Arabica prices consolidated ending 1.00 cent higher. The main activity was generated by spreads trading as index and spec funds began to roll the positions ahead of the first notice day for the July position. The real devaluated 1.1% affected by the political situation. COT figures showed non-commercials increasing their net short position to 27,000 net shorts.
 
Lingering fundamental concerns supported London heading into the weekend as values bounced away from nearby lows to settle above the psychological $2000 barrier. Overnight volatility in the currency markets following the UK election failed to feed into  Coffee as values ticked higher despite Dollar strength. With much of the market maintaining a close eye on Brazilian weather reports over the weekend, London responded to moderate short covering in New York as the States emerged online, although never threatened to break away from recent range bound action. With flat prices looking to have found a short term base for now, reasonable upside protection traded via the options market, although many participants await a breakout through recent highs in order for volume and volatility to return in earnest.  July book management begins to pick up pace; 4700 lots trading though a $4 range whilst values remain firm further down the board, with the Sep/Nov strengthening to $11 premium having held resiliently in premium all week.