April 24th, 2018

Friday’s monster COT induced early (and sustained) buying notwithstanding, Arabica traded a lackluster session in terms of participation, yet settled 1.25 higher at 118.95.  The net non-commercial exceeded even the most ambitious of expectations by a wide margin, coming in at -70,577.  While a significant max would have led to a snap rally in prior years, perhaps it is a sign of the cynical times that the best KC could muster was a test of the 26MA.  While the kindling for a potential rally in the future continues to stack without spark, the nearby picture is less comforting.  The roughly $500+/- million (depending on whether looking at the gross or net sales) short spec KC investment made around the $1.18 price last week closed the day a mere $3.7m underwater even with the 125 point rally – a speedbump met by origin on our books.  The BRL trading to nearly 3.45 changes the picture dramatically for the producer in that origin to the detriment of the market; while prices are 2.25 clb below the YTD median line in USD terms, they are actually above the same in BRL terms, closing 4.096 BRL today vs 3.978 year to date.  Robusta closed $10 higher at 1769 as spreads took top billing, yet was greeted by renewed Vietnam selling.