Coffee Futures Escalate on Options Expiration by FC Stone

Arabica coffee futures for September delivery closed lower on Monday after a very volatile week as a result
of options expiration last Friday. The September contract settled at 134.75, down 275 points. The volume
reached 44,477 contracts including 15,861 switches. The U/Z structure keeps widening and it reached the
lowest level since the 26 th  of May at -3.90 before settling the day at -3.75. The open interest on Friday was
reduced by 5,996 lots, which reflects the short covering behavior that the market has had over the past
few sessions. The down move was mainly influenced by an overbought technical condition on the daily
chart  and  the  rumors  of  an  increase  in  the  GCA  warehouse  stocks,  that  was  later  confirmed  by  the
publication of their monthly report with a total of 5,833,349 bags of inventories for the month of July,
which is 7% higher than the inventories of the previous month.