Coffee Commentary for Sep 26th--FC Stone

ICE Coffee Futures Dip On Technical
Factors


Arabica futures struck lower today after three days of mostly
  constructive performance. The most active contract for December delivery
settled  160 points lower at 115.65 cents a pound with a lowest price of 114.80,
15  points shy of where the contract opened this week. The short-lived short
  covering raised the market above the 20-day moving average until a precipitous
  fall of considerable volume brought prices back to the familiar range of the
  lower Bollinger band. Fundamental news is sparse, with few developments at
  origin to influence market movements. Both the Brazilian Real and Colombian
Peso  saw slight devaluation today, though nothing sizable compared to recent
weeks.  Today’s performance keeps coffee futures range-bound with an upper
resistance of  121.05 and support at 114.00 basis December.



Until we start to get some physical flow London continues to search
  for something which may not be there. Opening selling which took London lower
  was more associated with liquidation of short term longs than origin. A slight
  build noted from 1710 in November could be linked to selected origins. Much of
  the conversation revolved around the movement of the larger Index associated
  long out of the November position ahead of month end on Monday.  The
November  slipped back into a small discount to make up a fair percentage of the
turnover  in that position. Traders prepare for pressure as bids appeared at
larger  discounts. Volume was better in weakness as the morning developed which
proved a  point. Management of overnight longs appear to have generated the main
pressure  into the session. With the open position down 255 lots in such poor
overall  turnover yesterday once again we can only describe the lift as another
reaction  in a Bear market. Arbitrage values narrowed fairly aggressively which
attracted  a round of covering operations which in turn generated selling into
Robusta as  the board elected stops below 1680 breaking the market lower.
Composition of the  marker reflected a similar pattern over the last few weeks.
Prices work hard to  generate an upside reaction which is based on short
covering and is quick to  resume the downside path. The market will need to
generate something special to  change the pattern for the
weekend.