Coffee Commentary September 8, 2014

ICE Coffee Futures Finish Lower

Arabica coffee futures finished lower Friday at the end of a very quiet trading session.  The most active contract, for December delivery settled 440 points  lower at 198.05   cents a pound.   Volume reached   only 11,992 lots. Speculative selling was encouraged by the  lack of follow- through after yesterday’s   action.  A drop of other commodity markets added the bearish sentiment.    In Brazil, the real was under pressure on concerns about the October election that polls suggest now  an increase of  support for Dilma Rousseff.  During the week, Arabica prices declined 3.15 cents or 1.5 %.  The coffee  market experienced   a very instable conditions , trading in an ample range between 209.95 and 195.30.  The weather in Brazil  was the main factor that caused this  volatility of the prices, following reports of dry weather and rains for the main growing areas.    

London - Volume has been the biggest casualty going into the end of the week with the turnover in Robusta returning to levels more akin to the summer doldrums of July than the pre-roasting season of September/October and it was this general lack of activity that capped yesterday’s spec led rally around $2100 through the first half of the session. Despite showing an increase in open interest of nearly 1,500 lots London was also quick to follow New York’s lead lower as both markets felt the pressure of short-term long liquidation. On a weekly basis we end the period almost exactly mid-range. It’s not a rejection of the highs but the board is going to need to work hard to live back above $2100 over the near-term.