Coffee commentary for Aug.14th

ICE Coffee Futures Close Lower

Arabica  Coffee futures for September delivery   closed 115 lower at 184.10 cents a pound  this Thursday in a slow session driven primarily by spread trading. The Sep/Dec spread reached a low of -4.40 closing slightly higher at -4.25 with a total volume of 10,951.  Total volume reached 33,187 lots.  With regards to technical, December futures have established a comfortable trading range at the 180-190 level in which the market is likely to trade until further information is revealed about flowerings in Brazil. Open interested for August 13th increased 1,146 lots to 160,105 lots.      

London - Lack of volume was the main issue for London during the morning session with selling above the market gravitating to the price action. A build of selling above the board was noted from the opening stages which comprised of a mixture of sources. The structure continued to tidy up positions as the market moves through an important transition with the spot month exposure. After the activity yesterday the overall open position recorded little change but for the moment the spot month open position holds just above the November exposure by a token 500 lots. Arbitrage was interesting as value widened on the back of the intraday covering rally in New York taking the Nov/ Dec premium out towards 102 cents which provided the idea of covering pushing New York.  The market is still searching for demand as traders return for summer vacations but activity is slow to start. New crop from Vietnam is still months away despite expectations that it will be early as seems to be the norm over recent years. The influence of the underlying Put strikes on the September options could become a downside draw for the price action as we move into next week and the expiry next Wednesday 20th August.