Coffee commentary for Jan.29th

Arabica coffee futures plunged Thursday as heavy rains are expected over the main coffee areas of Brazil for the next week. The most active contract for March delivery settled 770 points lower at 160.00 cents a pound, after testing the lowest level since February 14th 2014. Arabica coffee futures traded in an ample range of 920 points reaching a high of 167.95 and a low of 158.70. The prices were pressured by the weather in Brazil as more rains are expected over Zona da Mata and Minas Gerais during the next days. The volume was impressive reaching 43,515 lots, including 11,954 switches. In other news, the Regional Cooperative of Coffee Growers in Guaxupé (Cooxupé) exported a record 3.232 million bags of Arabica coffee in 2014, up 19.4% from the 2.706 million bags sold abroad in 2013. The drop of soft commodities contributed the bearish sentiment. In Brazil, the real devaluated to reach a high at 2.6146 BRL, the biggest decrease since January 19th amid concerns of inflation. The real ended at 2.6064, down 1.1%
London Market - Volume was the main issue in London as the market tracked the sharp downside reaction in New York. Opening levels tested resting origin selling which has developed over the market scale from the 1980 level bases March. As the session got underway the bulk of the activity revolved around the March/May structure. The discount has recorded limited movement over recent days but the focus has intensified as traders organise for the month roll over next week with the January expiring tomorrow. Despite the aggressive roll over in New York Robusta values held well with prices taking time around the 1950 pivot area into the second part of the session. As we move into the new trading month next week time closes down quickly towards the “Tet” holiday with logistics creating problems to move coffee and the holiday starting in full flow which is not until the 19th February. The lead into the holidays gets longer each year. Farmers hold good stocks and short players appear under control. Prices have lost traction as levels roll over attracting momentum sellers once again.