Coffee Commentary for August 5th

ICE Coffee futures close 110 points lower in uneventful session

 

Ice Coffee Futures for September delivery closed slightly lower today at 189.40 in a slow session in which activity was mostly driven by short-term specs. Open interest increased by 1,922 contracts from yesterday to today which indicates that today’s upsurge in prices throughout the morning session was most likely caused by short-covering. The Sep/Dec spread further widened today reaching a low of -4.00 and closing at -3.95. Volume was 30,557 contracts     

 

Registered coffee production in Colombia grew 25% in the last twelve months (August to July 2013-2014) and reached 11.7 million bags, a six year high, as a result of a renovation program and increased productivity. As well as production, exports from Colombia also recorded a significant rise. During the last twelve months foreign sales exceeded 10.8 million bags, 29% more than the 8.3 million bags exported in the same previous period last year.

 

London - Opening pressure was well absorbed in London as the board held the lows of yesterday. Volume was moderate in the action with the September structure holding a small discount. Prices quickly rebounded with overnight shorts covering as levels traded back to resting selling. A firmer New York attracted buying into London as the market held gains into the session. Origin activity remained sporadic with selling backing away from strength. Much of the flow revolved around the sorting of September positions and in turn the structure. This is supported by the changes in the open position with the spot month down 1,703 lots yesterday reflecting in the overall exposure down 428 lots.  Prices struggled to engage the upside easing back in line with New York. The arbitrage premium started to work back from the 100 cent premium of last week trading nearer to 97 into today’s session before springing wider with the New York rally breaking towards 103 cents premium which pulled Robusta back into positive numbers on the day. London operates back into the range 2000/2050 bases the second position which has tended to be the case since mid-June. Sideways action does not have a good record.