ICE Coffee Futures Dip On Technical
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
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