Arabica coffee futures closed lower as speculative liquidation continues. The benchmark position for December delivery settled 55 points lower at 161.25 cents a pound while the most active for March delivery closed 90 points lower at 164.40 cents a pound. The nearby switch, December-March, still attracting good interest generated the most of the volume. A reversal of this structure surprised short players. A reduction of the open interest evidenced the recent speculative liquidation. The OI decreased 2,667 lots yesterday to 204,830 lots, and it has decreased 23,213 lots since November 7, when the December position posted the highs of 175.65 cents. In options activity, high volume was noted below the 150 strikes January basis, with 800 lots of the 150 puts and 1545 of the 145 puts traded today.
London Market- London maintained its recent upward trajectory, though lacked the volatility which has been a feature of recent sessions.
Though scattered origin selling remained, particularly through the early stages of the session, a failure to attract fresh shorts prevented any sustained tests lower. With New York remaining under pressure, arbitrage players maintained their recent activity with values ticking higher for the remainder of the session. A break above the 20 day moving average at $2146 saw additional longs enter the market which offers encouragement for further moves higher. The Jan/March spread continued to operate under volatility, trading an $18 range across the day.
The desire for additional downside coverage generated options turnover, with 2000 lots of the May 1950 put purchased, financed through selling 100 lots of the March 2150 put.
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