Coffee Commentary September 3, 2014

ICE Coffee Futures Climb on Weather Concerns

 

Arabica coffee futures rallied to highest price since May 29 on dry weather forecast for the  Brazil main growing areas.  The most active contract for December delivery settled   825 points higher at 209.45 cents a pound.  The  Brazil’s SOMAR weather report  said  that only scattered showers  will reach some coffee areas during the next 2-3 days, while the  model  indicates  a dry weather pattern will predominate  until September 15.   The speculative buying was encouraged by the firm opening, following yesterday advance of the London market,  and helped by the constructive pattern on the chart.   Other commodity markets were under pressure due to the strengthened  of the US dollar.   The CRB index declined 307 points to finish at 513.77. Gains in manufacturing boosted the US economy today.

 

London - Arbitrage values widened taking the New York premium towards 114 cents as follow-through spec interest took New York higher. The market was anxious for more updated weather reports out of Brazil. Even with the two day holiday in Vietnam scale origin selling evident as the market broke above the gap created on the downside reaction of early August. Prices pushed ahead on the back of the aggressive rally in New York looking towards highs traded back on the 1ST August when prices topped out.

Little background news supported the move for Robusta as the market awaits updated news of shipment arrivals into Europe. The recent hike in prices has enabled rolled price fixing to be locked in which has generated the origin selling which has respond to the strength.  We have come across little to no fresh business being reported as we look to the new season at the end of the year. Traders will always talk about a decent and early crop out of Vietnam. Prices grouped well into the closing period holding above the important 2100 marker in November as it looks towards the highs in August of 2129 and into the congestion zone 2120/2140. “Managed Money” funds have reduced exposure during August by some 8,000 lots so have plenty of room to replace.