Coffee Commentary for August 11th

ICE Coffee Futures Rally on Crop Concern

 

Arabica coffee futures rallied Monday as participants reacted to reports from Brazil indicating early flowering could be aborted  due to dry weather forecasted for the rest of the week.  The most active contract for September delivery gained 830 points or a 4.5 % to settle at 189.15 cents a pound.   Volume increased to 45,248 lots, including 14,972 switches .  As  usual , good speculative participation on switches  is attracted ahead of the first notice day  ( August 21)  for the delivery month , in the case for  September.  In  Brazil,  good flowering has been observed in  several areas as Patrocinio, Coromandel and Cerrado region.  According with   meteorologists,  rains won’t be enough to help pollination of premature flowering, causing weakening    of the pollination process. 

 

London - Activity was focused on the first two positions as the management of the spot month dominated the flow of business. The September discount edged out to $12. Light selling appeared scale above the market which was of mixed interest. Origin again noted more by absence with long liquidation the driving feature of the market. Light price fix buying was enough in the thin conditions to lift prices back to unchanged by close of the morning.

COT report recorded little movement in the net numbers with the processors reducing the long slightly to 34,171 whilst the “Managed Money” long added 850 lots to 31,622 and the “Non-Reportable” reduced exposure to only 38 lots short. The biggest changes was from the “Other Reportable” category which attracted fresh shorts taking the long down to just 249 lots a reduction of 2,138 lots which explained the weakness during the week.

Prices worked higher on the back of the upside reaction in New York but made hard work of attracting new interest only influencing momentum short covering. New York rallied hard pulling London along moving back above the important 1980 marker in the spot month to re-engage some of the short term indicators.