KC prices fell to the lowest level (100.60) and settlement (100.95 -375) since the 99.10 low and 100.90 settle of the 27th of July 2006 as the BRL fell 1.4% and momentum funds continue their assault on Arabica prices. Since July 24th the Real has fallen over 7% while KC prices have dropped 13% in the same time frame. Funds now are holding a net short position in excess of 100,000 lots which on Friday’s COT represents 26.68% of open interest, a 2% increase over the prior week’s record, yet despite the new extreme, was below what most were expecting. Industry extended out the board as a matter of course while the best sellers remain the persistent systems funds. A fair amount of sticker shock accompanied the September contract trading below a dollar for the first time since September 14, 2006 as some longs opted to throw in the towel in lieu of rolling at a 370 discount. Whether today was a capitulation day is left to been seen, and with Thursday’s FND on the horizon, even the most skeptical amongst us are begging for a gasp of fresh air. Across the pond UX remains the attention getter, trading to a new high of 87 over, while November settled +6 at 1566.
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