Coffee Commentary September 17, 2014

ICE Coffee Futures Finish Slightly Lower

 Arabica coffee futures were lower Wednesday at the end of quiet session with most of the market’s participants focused on the outcome of the FED policy meeting.    The most active contract for December delivery settled 40 points lower at 184.85 cents a pound.  Volume totaled 10,143 lots including 1,514 switches.   The market received support as SOMAR weakened  the cold front that will approach the coffee areas in Brazil this weekend.   According with the weather report, the front will  bring rains to all coffee areas but projected volumes are much less than previously forecasted.   At the same time, the University of Sao Paulo research group reported that the flowering in some areas is delayed due to dry weather.  Blossoming in  Garca,  Sao Paulo and Zona da Mata is overdue compared with previous years, they said. 


London - Prices clawed higher in light opening trading in London as the board continued to use the 1980 level as its marker in November .The trade continued to look for more rolling from the managed money sector creating pressure on the structure which continues to generate the main flow for the market.

Stock levels in Vietnam are running about 100,000 tonnes above normal for this stage of the season if we are to take general estimates which circulate. Physical differentials have strengthened in line with weaker futures but demand is very limited. If we look ahead into the new season crop ideas push towards 30 million bags with the standard comment that harvest will be early but more likely be available into early January.

Turnover struggled into the second part of the session with New York rolling over into minus numbers. It is interesting that the open position was down again. The changes are small on a day to day bases but loss of momentum will be important for the managed money sector. Lack of volume will question weakness this week, but weakening structure and coffee being recorded delivered back to the board casts a different complexion on to Robust into the weekend.