INTL FCStone Daily Coffee Report

Arabica coffee futures for December delivery lost 290 points to settle at 150.15 cents a pound. Volume reached 29,311 lots, including 6,173 switches. The nearby December –March switch widened 5 points to end at -3.35 cents. Good activity was noted on the Dec 150 and 140 Puts. The price action discouraged long players after good the initial rally failed, triggering the speculative liquidation during the drop. In realated news, Vietnam’s 2015/16 coffee exports hit a record 1.75 million tons, according to the government. Meanwhile, Guatemala’s coffee exports are expected to hit 3.1 million bags for 2015/16, higher than last year’s 2.926 million bags. From a macro perspective, the uncertainty in the global and political environment seems to keep markets on edge.
London Market- Although subdued in volume and price action for much of the day, a final hour rally in London resulted in a dynamic finish to the session. Light origin selling, though scattered, was present through the day but not at significant enough volumes to push values lower. Buy stops on yesterday’s high at $2004 pushed values to fresh highs for the week and last week’s high at $2028 becomes a new short term target to the upside.
Options activity continued to feature with 404 lots of the March 1950/Jan 1800 put spread traded at $60 while a further 404 lots of the Jan 1700 put were bought at $5 as downside protection maintained the attraction of participants. Open interest in the Nov 2000 call remains at 3,970 lots, acting as a magnet on the outright futures market.