Commentary for April 15th

ICE Coffee Futures Finish Higher With the Help of a Slumping Dollar

Arabica coffee futures advanced for second consecutive day as dollar weakness and rebounding emerging markets currencies helped add to the bullish sentiment. The benchmark contract for May delivery settled 120 points higher at 135.80 cents a pound and the July position ended 70 points higher at 137.35. Volume decreased to 48,525 lots, including 19,430 switches, as the most actively traded May-July switch ended at -1.55 after trading between - 2.00 and -1.10. The action seems to be reflecting that the fund roll period is coming to an end. In related news, according to the ABIC as reported by Reuters, domestic consumption in Brazil rose by 1.2% to 20.33 million bags, for the year ending last October. Commodity and equity markets moved higher today after the European Central Bank kept key interest rates on hold in order to ratify a strong commitment to the massive bond-purchase program.
- US March GCA Stocks down 116,443 Bags to 5.035 million bags.
London Market - Structure remained the focus in London comprising more than 80% of daily volume with K/N strengthening significantly on the back of K15 outright covering and similar activity in New York. The working exposure in May is still high over 39,000 lots so we still have a lot of sorting out to be done into the second half of the month. Switch activity will need to intensify even more into next week with still finance and price fix AA’s to be posted. K15 option expiry in London was not particularly eventful with activity in London focussed much more on the arbitrage play with the New York premium beginning to widen again into this week as new interest emerges. The market holds well above the 1800 level basis N15 this week, but the board is yet to engage the upside triggers. Origin activity remains consistent throughout the session but the situation in Vietnam shows little change with exporters looking to cover shorts amid tightening differentials. Robusta needs a new line of interest but continues to run quiet long