Coffee Commentary for April 23rd

ICE  Coffee  Futures Plunge Lower  

Arabica  coffee  prices moved sharply lower today motivated by speculative selling that
triggered  large  stop orders, a weakening of the Brazilian Real that prompted
exporter  selling, and an overall deterioration of the technical picture.  The
active  contract for July delivery fell 5.55 cents to settle at 137.55 per
pound.   Circuit breakers at the ICE were triggered for “C” futures as a
cascading stop  situation pushed prices rapidly lower.  A cascading stop is
characterized by the  accumulation of stop orders that trigger other stop
orders, which hit yet more  stop orders and so on; a condition that creates a
lack of liquidity and a price  vacuum.  Origin selling was also noted as weather
in Brazil coffee regions  remains optimum while the harvesting period looms and
the Real weakened against  the Dollar.  Technically, near term support is seen
at the April 15th  133.55 low basis July.  
  


London: Robusta recorded an active
opening  sequence with the board uncovering a batch of sell stops below 2060 in
July  which produced good opening volume. The action appeared to take the market
  unawares with buying building into the market after the initial move lower.
  Turnover was good with the action reflected in the May discount widening back
  towards $30 before the market reverted to a tight operating range into the
  balance of the morning. Prices came under increasing pressure into the second
  part of the session as the board rolled over into another wave of selling which
  followed weakness taking the board below a second trigger of 2050 looking
  towards the 2000 marker. Flat price selling intensified with the weakness
taking  out resting price fix buying. Prices found it difficult to find a level
working  around the 2020 pivot level having turned all the main indicators lower
with  today’s performance. The question from today will be to what degree we
have  released “Managed Money” longs after such a performance. The working
number as  of the last COT report at 17,033 was considered higher than expected.
The board  was not in a position to recover the lost ground edging nearer to the
2000 bench  mark into the closing sequence of the day totally turning indicators
and pulling  in intraday shorts.