Coffee commentary for Jan.22nd
ICE Coffee Futures Decline for Fifth Consecutive Session
Arabica coffee futures finished lower Thursday as specs remained to exit the market. The nearby contract for March delivery lost 130 points to finish at 159.95 cents a pound, the lowest level since July 16. Forecast of rains continue to pressure the prices. News from the ECB, European Central Bank, expanding the stimulus measures prevented further losses for the coffee market. The ECB announced a plan to buy up to 60 billion euros a month of securities to expand the economy. The announcement encouraged buying of some the commodity markets. In Brazil, the real appreciated after the central bank raised the interest rates to 12.25 percent from 11.75 percent. The real ended at BRL2.5746, recovering 264 point from the previous session. The open interest decreased 1,039 lots to 163,583 lots.
London Market - Another slow day in London as the market consolidated around the 1940 area. Industry participation was negligible with roasters anxiously waiting for a breaching of the 1920 to provide more attractive buying levels while Vietnamese producers waited for more news on Brazilian production forecasts to take a decision as to when to release coffee. The conversation has revolved around the Tet holidays and upon a close study of seasonality charts pressure tends to be exerted on the market between 16th and 30th of January. The H15/H15 arb reached 73c/lb , its lowest level since the 21st of February of 2014. More activity in the May options with the 2000 and 2200 strikes matching up some decent volumes in Calls as the market continued to probe on the downside attracting an increasing interest from the momentum players as they added to shorts. Exposure continues to grow adding another 400 lots. The working open position in the spot month is down to the last few lost so the focus to sort out the March exposure begins to intensify reflecting in a higher percentage of switch business coming together in what remains slow market trading. Internal logistics in Vietnam will begin to slow down as we swing into the new trading month with differentials firming.
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