Commentary for April 10th
ICE Coffee Futures End Lower
Arabica coffee futures closed lower Friday pressured by long liquidation and profit taking. The most active contract for May delivery, settled 235 points lower at 135.10 cents a pound. Volume was impressive with 55,965 lots traded and including 20,182 switches. The active May-July switch ended unchanged at -2.70 cents . New York coffee traded in a range of 465 points, reaching a high at 138.45 and a low at 133.80. May options expired today. In related news, the Brazil discount for some arabica-coffee varieties tightened. Price for fine-cup coffees was seen at 8c/lb under futures in N.Y., according to Flavour Coffee a Rio de Janeiro-based broker. That compares with 10c/lb a week earlier. Discount for good-cup quality beans was at 20c/lb. vs 18c last week.
London Market - Price fix buying help lift London into early trading as the board worked to engaged the upside leading into the weekend. Trading revolved around the May structure as discount narrowed on decent volumes, trading into $22 into the afternoon. The market wanted to talk about the lack of rainfall in Vietnam over the last few days which has been tracked since the start of the month but if anything this was another reason to explain the continued strength of the local market as longs withdraw and shorts move with the market. Much more outright business being reported locally although the volume into London has not been heavy this week but it has been consistent bases May and July. Local activity in Indonesia has intensified as local buyers compete with exporters with a number of reports of “washouts” circulating. May options expire in London next Wednesday 15th April. The skew is very much to puts at these values. The 1800 strike carries 1,275 Puts against just 22 Calls whilst above the market at 1850 we carry 1,667 Calls and only 8 Calls so the numbers are small in comparison with little to no effect expected. The movement in exposure on the short week is almost non-existent reflecting just rolling of May exposure. Decent weekly settlement as prices move away from a base area of 1800 in May but still some away off for changing the medium term configuration
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