Coffee continues to succumb to gravity, pulled 215 points lower to 88.00, the lowest settlement since May 28, 2004. The dollar was a key driver of the weakness as global uncertainty drove risk markets lower. The KC x DXY was persuasive, and while systematic funds would be the logical conclusion, sentiment grows worse by the day and commercials have been the instigator of much of the recent weakness. Outright Arabica volumes were approximately 19k lots, a bit above recent average yet nothing that would suggest the drama that price would. Even as KC ground down to prices never seen by many in the market today, Robusta was the clear focus of attention. July futures fell to 1295, -50, with a low of 1282. The settlement was the lowest since a 1287 double bottom on March 23 & 24th 2010, from which London bounced to 1342 the following day and has never returned (until now). Pressure came both via the arbitrage and reportedly by origin as the Vietnamese hit stop loss levels on shipped / unfixed and deposit coffee. An 8:30am washout saw roaster buying arrive, yet few expect a white night anytime soon. May open interest remains above 2k lots. Interestingly, and admittedly a simple factor of math, Arabica is down the equivalent of $57/mt over the past 2 sessions, with robusta -$50/mt today (which would include any catch up from yesterday’s closed session; KC fell 45 points while London rested). However in terms of percentage moves which may catch the eye of investors, the smaller Robusta pullback in terms of value was also the larger move in terms of ratio; KC is down 2.87% to start the week while RC has fallen 3.72%.
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