Coffee extended its rally closing 445 points higher at 107.45. Weather concerns seem to have sparked the recent rally to a large extent – a lack of imminent threat notwithstanding the excitement – driving Q Vol and futures with it. However, the push has developed into a technical spike, with plenty of volume on both sides as skeptical discretionary shorts have been active sellers. A lack of MOC buying may have been a positive for the bulls in the end – a lack of aggressive buying kept coffee short of the key technical resistance levels between 108 and 109. Had prices reached, and been capped, at 10820, 10840, 10880, etc, it could have been considered a failure. Post settlement bids evaporated as James Bullard (St Louis Fed President) stated on Bloomberg TV that a 50 point cut in July would be overdone, sending the DXY flying and adding to pressure on the BRL. No notices were issued on FND in Robusta. 3k+ AA’s were posted in July, along with 450+ N/U, against 5562 lots of OI. Futures rose $33 to 1455 in Sept, reluctant to keep pace with Arabica. The arb is now 41.45.
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