Coffee Commentary for May 20th

ICE Coffee Futures Finish with Small Gains

 

Arabica coffee futures finished higher on Tuesday, recovering from early losses.  The most active contract for July delivery closed 220 points higher at 185.70 cents a pound.   The market was under pressure early, dropping more than 340 points on speculative selling. Price bounced when good support under the 180 level was noted. Weakness of the real contributed to add weight.  The real fell along other emerging-market currencies as world unrest increased investors risk aversion. The real still is one of the best performance currencies, gaining 6.4 % during the year.  The real ended at BRL2.2200, down 88.66 points from yesterday.  In related news, USDA estimates Colombia 2014 production at 10.8 million 60 kilo bags and 11.9 million for the next year.  From Brazil,  sales of 2014/15 (Apr/Mar) crop as of the end of April 2014 are estimated at 18% of the expected 47-48 mln 60-kg bag harvest, hardly changed from end-March, Safras & Mercado said. Producers usually have sold 20% of the coming crop by the end of April, according with Safras & Mercado.  Last year crop sales are estimated completed at 90 % compared with 91% five-year average.

 

London - Opening weakness uncovered a mixture of price fix buying which in the thin trading conditions was enough to lift prices back to unchanged. Much of the turnover was still generated by the structure with the discounts narrowing slightly from last week. Origin interest was light pitched scale from 2050 in July with the sorting out of the spot month exposure slowing down as the open position dwindles away. Activity slowed into the second part of the session as the market looked towards New York for inspiration. Certified stocks jumped significantly in the last 2 weeks reflecting the grading that has been processed. The position increased by 1,737 lots to a revised total of 3,354 which is the largest position since early November last year. Activity from Vietnam should slow down now we are into off season with healthy stock at origin held against forward commitments. Exposure was down over 1,400 lots yesterday with the spot May working with only 267 lots open now before its expiry next Friday. The weaker settlement yesterday could suggest longer term liquidation from the managed money sector. Arbitrager values continued to get comfortable below 90 cents premium bases July which traded towards 88 cents during today’s session. The technical configuration of Robusta looks poor having formed a decent “Top” over the last two months. Price action will need to consolidate back above 2150 in July to break this down!