INTL FCStone Daily Coffee Report

Arabica coffee futures continued to advance on Friday on speculative buying encouraged by the technical picture. The most active contract for march delivery settled 245 points higher at 153.20 cents per pound. Volume was 23,403 lots including 3,725 switches. Activity in options was mostly on the March 155 and 160 calls. The technical outlook attracted speculative buying as the chart improved notably when prices exceeded the recent resistance at 151.60. Equity markets in general were quite nervous due to the Presidential Inauguration Day in United States. The dollar ended lower after trading unchanged for most of the session. The real and the Colombian peso, climbed to BRL3.1691 and COP2924.1. The COT report showed that non-commercials covered shorts and added some longs for a net long position of 22,163 + 8,598 as of Tuesday Jan 17.  The short covering so far has been significant.  Since Jan 02, the OI has declined 15,696 lots. During the week, Arabica prices gained 3.95 cents or 2.6%. The weather in Brazil remained to concern traders as less rainfall that forecasted has been observed. The Espiritu Santo, the main Robusta producer state continue under dry conditions.
 
London Market- London failed to generate further upside momentum to draw the week to a close, with a combination of origin pressure and arbitrage selling providing a lid on the market. With little action of note through the opening, attention turned to New York which continued to strengthen following a dynamic settlement last night. Having been absent for most of the week, origin selling returned in good volumes to stall upside traction after a temporary breach of the nearby high at $2266. Consistent selling was generated through the arbitrage, as traders bought New York and sold London as the March/March widened through 50 cents.
The options area attracted good turnover, with 1000 lots of the March 2300/2400 call spread traded at $30. An additional 500 lots of the Sep 2250/2400 call spread traded at $55 as participants look to build upside protection down the board. Tenders for the session were zero.