Coffee Commentary for December 17th

ICE Coffee Futures Lower on Technical Weakness

 

Arabica coffee futures traded in a narrow range today, failing to test much higher or lower in a day marked by low volume and diminished volatility. The active contract for March delivery ended 115 points lower today after oscillating between 115.90 and 113.85 to settle at 114.15 cents a pound. The lack of origin selling continues to be a factor in market performance, leaving day-to-day action up to speculative operators who liquidated longs placed last week. Yesterday’s brief recovery was further short-covering as evidenced by a drop in total open interest. In financial news, the Federal Reserve held its last policy-making meeting for the year today with results to be announced tomorrow. Today’s performance does nothing to change the current configuration of the market, which will have to test 116.35 for resistance and 111.85 for support in the March contract.

 

London: Robusta was working to find a level into the session as prices continued to roll over. The implication of options has become important into the weakness as it was when the market rallied. The delta positions which accumulated on the upside needs to be released which added to the spot month pressure over the last few days reflecting in the performance of the option premium. The COT numbers for Robusta showed a significant reduction in the net short which been an important feature to the change in configuration that the London market has reflected over the last few sessions. The origin picture is not showing any significant change but with the approaching Christmas holidays and the “Tet” celebrations coming ever nearer at the end of January the pressure to realise income against financing will be an interesting scenario to monitor. Changes in the open position reflect the ongoing pattern of liquidation with the exposure down another 2,672 lots after the weakness yesterday which could be associated with the options. Prices continued to work lower as Levels approached the lower option strike of 1700 which could present an interesting scenario for tomorrow. Momentum has broken with the board turning lower but the market continues to operate with seriously low certified stocks.