Coffee Commentary for Feb 13th

ICE Coffee Futures Fall to New Lows  --By FC Stone
  

Arabica coffee futures fell to fresh lows on origin and
  speculative selling Wednesday. The active contract for March delivery settled
  190 points lower at 138.75 cents a pound.  With only four days for the first
  notice day for the March contract, February 20th, producer and  speculative selling intensified because
of the weak price action.  Less rolling  activity of the funds caused the nearby
switch Mar-May to narrow to -2.50 early  on the session; however the switch
widened to -2.90 cents at the end of the day,  after the producer and
speculative selling developed. Other markets were mixed  today, with the metal
and the grain complexes declining modestly.  In Brazil,  traders returned from
the carnival holiday.  The Real climbed a little due to a  positive foreign fund
inflow and the central bank absent.   A large decrease of  the open interest as
of yesterday might reflect the offsetting of commercials  positions ahead of the
delivery period for the March position.  The open  interest decreased 4,449 lots
to 159,769 lots.


  
In London, there was little change to
the  opening pattern of trading with the March discount getting comfortable into
the  $20 zone. Pace of the market was slower into the opening period as levels
worked  to consolidate. Robusta has a lot to live up to after the action of last
week  when the board was $70 higher. What was interesting was that the open
position  over the week was actually down overall which provides a slightly
different  presentation particularly when most of the conversations have
revolved around  the increased in long from the managed money exposure. The flow
of coffee being  put forward for Grading continues with another 120 lots in the
system today.  This month we have reached 462 acceptable lots which is the best
few days in the  last 3 months! Changes in exposure in London reflected the
rolling of longs with  March down over 2,000 lots and the May increasing 2,400.
The most interesting  adjustment was the fact that the working position in the
spot month has now  fallen below May which will take over the focus. The March
discount continued to  edge out into the afternoon trading to $29 with the
volume making up the bulk of  the March activity on the day. Composition of the
Robusta market is becoming  somewhat conflicting with the structure weakening
against flat price strength.  Levels would need to roll over below 2060 bases
May to change the upside  momentum. 
  


ICE Coffee Warehouse Stocks were down 213 to 2,660,748
bags.  Pending Grading:  32,391 bags.