ICE Coffee Futures Plunge 4.9 Pct on Heavy Volume
Arabica coffee futures plunged Tuesday pressured by speculative selling, after the easing of the index fund buying. The nearby contract for March delivery fell 7.70 cents to close at 148.60 cents a pound. The volume reached 41,112 lots. The activity was boosted by
switches. The nearby switch widened slightly to end at -2.90 cents. A weak real in Brazil
and the technical performance added weight on the prices.
Last Friday COT report confirmed that the index funds added 8,559 lots as of last
Tuesday, and the funds covered 7,779 shorts, evidencing some of the reasons
of the recent rally. On the technical aspect, the breaking of the last week’s
lows triggered more liquidations and sell stop orders. Selling related to
arbitrage trading could add more pressure on the New York market. The March
NY-LDN narrowed to $0.607 from $0.667 last Friday.
After the opening pressure on the March/May structure yesterday morning which appeared to be weakened on the back of rolling of Managed Money longs the board adopted a more orderly flow of business.
Replacement style buying from industry recovered some of the opening
weakness as the market lifted to test origin which appeared scale from 1980 in
March as the market established the range. The environment in Vietnam has
recorded little change of the recent past with differentials holding firm and
the local market consistently bid which appears to have encouraged farmers to
hold stock. Exporters are working to accumulate stock which is adding to the
local support as the market quickly begins to think ahead to the New Year which
starts on the 8th February. Shipments numbers are expected to be good for
January with a continued build in non-certified positions in
London confined itself to another tight range into the second part of the session with the action edging nearer the origin interest above the market.
Influenced by the move lower in New York prices gave ground right back to the option strike which triggered some delta stops before working back to hug the strike price, before easing again into the closing sequence. Action has broken the momentum in today’s
ICE Coffee Warehouse Stocks were up 2,886 to 2,608,467. Pending Grading: 43,604 bags.