Coffee Commentary for June 24th
ICE Coffee Futures Close Modestly
Arabica coffee futures closed modestly higher Monday at the
end of a quiet session. The active contract for September delivery settled at
120.15 cents a pound after consolidating between 121.25 and 118.70 cents
range. Volume declined to 13,738 lots. Speculative short-covering
provided support to the prices as the market bounced from the lows.
Markets in general remained distressed after last week FED announcement.
In coffee related news, USDA published estimate for 2013-2014 world crop at
146.0 million bags, a decrease of 4.4 million bags from previous
year. Brazil production was forecasted at 53.7 million bags, down
2.4 million from 2012-2013. Colombia estimate at 9.0 million bags and
Central America and Mexico at 16.5 million bags. In Brazil, the real
closed firm against the US dollar at BRL2.2260 from BRL2.2406 last Friday.
London: The market had a lot to consider
regarding freight changes in July from Asia with increases of some 30% being
reported which indicates that it will cost towards $1000 per box to ship coffee
out of Vietnam next month. We have a week before first notice day for Robusta
and the open position in July was carrying almost 17,000 lots entering
today’s business so we have a lot to address over the coming days. Robusta COT
numbers showed the Managed Money long towards unchanged over the last week
which was not what the market was expecting considering the fact that the board
was $60 lower. Ideas were placing the fund towards 12,000 short in the numbers
as against 9,671. More volatility trades boosted the option turnover into the
afternoon which generated some buying of futures. The market was lacking the
presence of origin which allowed a lift in level’s but the board made hard work
of the move giving ground back into the afternoon as the market spent time in
addressing the spot month ahead of the delivery period starting next week.
Exposure in London was down 1,312 lots leaving a net open position of just
below 110,000. The reaction in prices was enough to change the momentum of the
market slowing the algo style sellers into the afternoon allowing the market to
settle towards the highs of the session.
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