Coffee commentary for Sept.22

ICE Coffee Futures Close Higher on Short Covering

Arabica coffee futures bounced slightly from a more that two-month –low settlement on Friday on speculative short covering. The nearby contract for December delivery settled 140 points higher at 179.75 cents a pound. Volume was modest, reaching only 13,416 lots, including 2,928 switches. The prices were under pressure early due to the rains in the Brazil growing areas reported during the weekend and forecast of more rainfall for the next two weeks. The devaluation of the real added pressure on the market. The currency lost 252 points trading at BRL 2.3937 near the closing time. Prices get help from the technical picture after support was noted at 17640 for the December contract.

LONDON- The composition of London revolved around the same pattern with the structure attracting the main interest as widening discounts enabled hedge positions to be rolled. A healthy number of “Against Actuals” boosted turnover in November as the market organised for the end of the quarter next week. Flat price action was still trying to find a level as prices operated towards the lows of the range established back in early June. The increase in the certified stock last week was interesting working back the numbers the change in position did not appear to work to the grading numbers suggesting that grading in the previous two weeks were running behind.

The open position for Robusta continues to edge lower on a daily bases reflecting the liquidation of nearby longs. November on Friday recorded the main change down 1,977 lots the bulk of which was rolled down the board. It appears we are entering a period of management from the spec longs involving part liquidation part rolling which is creating most of the action.

COT numbers recorded liquidation from the “Managed Money” longs taking the net position down to 27,112 which still leaves a gross long of 30,000 open which is big. “Merchants” covered shorts into the weakness reducing the net short to below 30,000 lots. Over the week the board was $83 lower with exposure down 3,195 lots. Prices continue on the defensive for Robusta as more liquidation pressure materialises with the 1920 being the next downside trigger in November