Coffee Commentary for Sept.25th

ICE Coffee Futures Revert Previous Gains

 

Rain forecast for Brazil and the weakness of the currency knocked down the coffee market Thursday.  Coffee for delivery in December, the most actively traded contract at the New York ICE market, fell 680 points to close at 182.30 cents a pound.  The speculators now, less concerned with a possible dry period   in Brazil opted to liquidate positions, at the same time the decline of the real encouraged producers selling.  The real fell 1.06% today, trading at BRL2.4231 at 3:00 p.m.,   on concerns that the Brazilian economy will be struggling to recover.  In other news, in Colombia the peso fell 0.5% to COL2, 018.97, the weakest level since March 18. Trend is for further declines due to the trade deficit, falling foreign investment and lower oil prices according with analysts. 

 

London Terminal - The market was prepared for follow-through buying in London after the actions of yesterday but immediately into the move higher the board attracted a mix combination of selling comprising trade and origin. This contained the move with levels easing back in line with the lower early performance in New York. Traders were constantly searching for excuses behind the aggressive move of yesterday with focus as always on Brazil.  Important activity was recorded on Jan/Sept trading at between 41/42 discount to attract the main attention which amounted to 4,925 lots on the day. This reminded players of some 6,000 lots of the same spreads that was traded a few weeks ago at $35 discount. On that occasion it resulted in an increase in the open position. Approaching month end and end of quarter will provide another influence to the flow of the market into next week. Yesterday’s exposure increased for the second session implying that the lift in prices did pull in some longs. Looking back on the working exposure the market carried last year we are only 1,000 lots lower but prices are $236 higher!  The board continues to hold the 1920 marker which will be crucial leading into the weekly settlement tomorrow as the market battles to find its level for the last quarter of the year.