Coffee Commentary for Dec.30th

ICE Coffee Futures Fall



Arabica coffee futures fell Tuesday, pressured by rain expectations and origin selling. The benchmark contract for March delivery lost 35 points to settle at 164.80 cents a pound. The activity was slow with the volume reaching 12,785 lots. “C” futures traded in a narrow range of 185 points, reaching a high at 166.45 and a low at 164.40. According to a Bloomberg report, Coffee, the best-performing commodity of 2014, is ending the year in a bear market that shows few signs of ending. Prices that doubled this year, by October fell 13 percent in the past two months as rains aided parched trees in Brazil the world’s top grower. November was the wettest month of the year, after the worst dry spell in eight decades.
London Market - The open position in the spot January was still over 3,440 lots open as players prepared for the opening day of deliveries on Friday. The focus to get positions down the board continues to drive activity with the discount unable to move from the $40 area. Origin have continued to delay fixing and roll positions which has been one of them most important features of the management in the spot month this month. Arbitrage has added to the pressure of the flat price as shorts cover in New York and release the long as the different edges below the 80 cent premium level. The volume of shipments out of Vietnam this month was higher than expected so it will be interesting to track arrivals. Over the last year we have been recording good shipment numbers but that has not reflected in any notable build in stocks which suggests that the flow of coffee goes directly into industry. Robusta tried to correct an oversold situation but made little impact. Levels would need to operate back above 1920 bases March to neutralise the short term downside pattern. January/March began to settle after 4,500 lots traded today with the discount beginning to narrow into $30 into the close!