Coffee Commentary for March 19 (from fc stone)

ICE Coffee Futures Continue to
  Slide  


Arabica coffee futures were again under   pressure Tuesday on producer and spec selling. The benchmark contract for May   delivery finished 125 points lower at 133.10 cents a pound.  Activity was   moderate with the volume decreasing to 20,549 lots.  Commercial selling  remained  mainly from Colombia but lighter than the previous session.   Several  coffee  departments from the main growing areas withdrew support to the FNC’s
manager  and asked for his resignation.  In Brazil, a firm real discouraged  producers  selling. The real closed higher against the dollar at BRL 1.9845 from  BRL 1.9869  yesterday.  Coffee producers will ask ministers to support a higher  price for  the coffee, the President of the Agricultural and Livestock  Federation of the  State of Minas Gerais (FAEMG), Roberto Simoes, said. The  government has helped  prop up coffee prices in the past, Simoes explained, by  offering to buy at a fix  price on a specific date. The New York-London  arbitrage narrowed to 35.3  cents/lb, the lowest settlement since December 31,  2008. Today’s settlement for  the futures contract is the lowest since June 7,  2010.
  


London: Initial weakness off of the  opening  was well taken by scale-down industry buying and it was not long before  the  board started to stabilise. A lack of follow through selling soon prompted  the  market to reverse and a phase of spec short-covering saw the board steadily  edge  higher for the balance of the morning session. Values were only able to  achieve  single digits in the plus column before moving back into reverse on the
back of  a weak ‘C’ contract. Business was generally orderly through the  afternoon with  Robusta being supported by arbitrage related buying. Only late  in the session  did the pace quicken to the downside, fresh spec selling
ensuring a close on the  lows. At just over 10,000 lots the volume seems weak in  comparison to the price  action. Nevertheless, the poor settlement does point to  additional losses  short-term. Support lies in the shape of the 20-day moving  average which only  now starts to loom into view ($2135).