april 3, 2023.
Arabica coffee futures markets experienced high volatility as the recent announcement by OPEC+ that they would be cutting production made crude oil prices jump, extending to the broader commodity complex. The most active contract for May delivery settled 575 points higher at 176.25 cents a pound. Volume reached 55,874 lots, including 16,537 switches. The nearby May/July switch attracted good participation as the market will be approaching the delivery period on April 20 for the May 23 contract. This surge in prices has created a new resistance level of 179.5 to 182.50 for the month of May. It is expected that coffee futures will remain relatively stable ahead of the holiday. The market will be closed on Friday. Certified stocks decrease by 285 bags to 742,609 bags. Pending grading remains at 0.
The Robusta terminal was not exempt from the broader macro positivity. Responding to the surprise announcement that OPEC+ oil producers will cut output by around 1.16 million barrels per day, values drove over 1% higher, with spot structure also finding support. However, as with all major macro events, the London market becomes a secondary focus in the coffee complex as the non-commercial sector usually favors funneling its flow into the larger Arabica contract; this was reflected in the arbitrage weakening 4.5 cents to 75 in May 23-23. Origin pressure slowed upside pace in London as a light but consistent flow was seen out of Vietnam into both the July 23 and September 23 contracts, with the region continuing to operate a disciplined approach to hedging into market spikes.
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