Coffee Commentary for March 3rd

ICE Coffee Futures Finish Sharply Higher

 

Arabica coffee futures had another impressive advance Monday closing at the highest level since March 2012 as concerns about the size of the Brazilian crop grew again.   Reports of rains in Brazil during the weekend and the Ukraine crisis caused some liquidation and speculative short playing early on the session, however players reverted positions when the selling eased and the world markets tended to stabilize. The market in Brazil was closed due to the carnival.  On weather news, SOMAR reported that rains of between 15 to 30 mm favored the Parana and Sao Paulo during the weekend. However, little or no significant rains are forecasted for Sao Paulo and Zona da Mata in Minas Gerais for March 8 to 12. Activity increased as prices climbed, helped by option related buying.  Volume reached 34,129 lots including 6,141 switches.

 

London: The Liffe Commitment of Traders Report showed the funds to be adding to positions in line with the recent strength, increasing their net long position by over 6,000 lots to the highest long holding since April of last year. Commercial sellers mirrored the funds with a roughly similar gain in their short position taking them to over 17,000 lots short on a net basis.    After all of last week’s activity, it seems as if traders may have taken a well-earned rest over the weekend and this showed as the pace of business started out uncharacteristically sluggish through the opening exchanges. By mid-session, the combination of a lack of origin offers, coupled with buying against the arbitrage helped London to remain steady even as New York faltered, putting it in prime position to add to earlier gains when the ‘C’ started to turn around. At just over 20,000 contracts, the price action rather flatters the turnover, however the strong settlements in both markets still point to additional gains near-term.