Coffee Commentary for Sept.10th

ICE Coffee Futures Plunge on Weather News and Weak Real

Arabica coffee futures fell the most since May 16 amid speculation that improved rains in Brazil will boost crop while a weakening real encouraged producer selling from the world’s largest producer.  The active contract for December delivery settled 1135 points lower at 181.25 cents a pound.  The Brazilian real fell to the weakest in five months against the US dollar, spurring growers to sell. Yesterday, Moody’s investors downgraded the outlook for the currency, and that combined with the prospects for  rains sent speculators towards the exits.  The real ‘s drop was the biggest among 24 emerging-market currencies after the Russian ruble and India’s rupee.  A Vox Populi poll published today  indicated Rousseff would be statistically tied in a runoff with opposition candidate Marina Silva, who led previous surveys.       The change in the Moody’s outlook comes after a government report showed last month that Brazil entered a recession for the first time in five years. The economy shrank 0.6 percent in the April-June period from the previous three months, after  contracting a revised 0.2 percent in the first quarter, the national statistics agency said Aug. 29.

 

London - Today’s session saw London give back most of last week’s gains as stops accelerated the latest push to the downside taking prices back toward the 2015-2010 support level basis November. The London board briefly became the lead market early this afternoon prompting spec selling to come into New York. Even though the volume was mediocre at 13,000 lots values were unable after their surge lower providing only a cursory rally mid-way through the afternoon session. Weakness in the structure mirrored that of the outright with the Nov/Jan spread ending the session under pressure just off nearby lows at -$10 discount. An increase of nearly 600 lots in the overall exposure tends to suggest hedge pressure as well as liquidation is keeping the market in the minus column