Coffee Commentary for June 4th (fc stone)

ICE Coffee Futures Slide Down
  


Arabica coffee futures fell back again today after two days
  of small gains. A weaker real in Brazil incentivized exporter selling, and the
  active contract for July delivery fell 135 points to settle at 127.65 cents a
  pound. Volume, still mostly generated by switches basis July, reached 31,000
  lots and set a good pace for the beginning of the week and the month. Brazil’s
  director of monetary policy, Aldo Mendes, stated that the real’s weakness was
  inevitable as a part of the global trend of currencies devaluing against the
  dollar. The real closed at BRL2.1348, just shy of the 2.15, a level it last
  reached in 2009. The Brazilian government also announced an 18% increase to
farm  credit for the 2013/14 season, reaching a total of 64.2 billion USD
available  for financing operations to improve production in grains and soft
commodities.  With the market facing lower again, ICE futures will be looking to
125 basis  July as the near technical support while 130 remains the near level
of  resistance.



London: Volume struggled during the
early  stages with the board once again lower with the turnover looking towards
the  structure. The July discount edged slightly narrower trading towards $28
but not  in the same volume as we had recorded into weakness which was the
important fact  of the morning. Nothing showing for grading during the opening 2
days of June  but the focus will be on movement of stock in consuming countries
particularly  if we move into the slower off take period and the Exchange
position starts to  decline which is a possibility with the origin situation as
it is with  differentials strong. Little change in the characteristics of the
London  Terminal with the board comfortable in probing lower but at the same
time not  inducing fresh involvement as the lack of volume reflected. Well into
the  Indonesian season and we are yet to have any impact upon the futures
market.  Exports out of Sumatra are reported well above last season during the
month of  May, but that was to be expected as the volume broke 22,500 tonnes to
record the  largest monthly performance since February when old crop stocks were
moved.  Trading range remained tight into the second part of the day as the
board  operated around unchanged but still not doing enough to test any resting
origin  selling which materialized again above the board both in July and
September. No  change to the technical format with the board looking to test
towards the lows  back last December of 1855 bases the second position unless we
can engage  covering above 1920